Minnesota has a big, fact tax hike on cigarettes which goes into effect today. It’s a $1.60/pack increase, putting the total tax at $2.83/pack.
Minnesota now has the 6th highest tax on cigarettes in the nation (New York is the highest at $4.35), which is part of the state’s record-setting tax hikes.
The intent of the law is social engineering. Lawmakers in Minnesota want to encourage people to stop smoking by raising the price of smoking. Ironically, though, lawmakers are also counting on the tax hike to shore up the state budget.
“It’s part of a state budget fix, but has also hailed by public health experts as a way to discourage smoking,” reports KARE11.
Counting on revenue from a tax on a product you also hope the tax will encourage people to stop using seems like a self-defeating proposition. If “public health experts” are right and people stop smoking, revenue from cigarette sales will decline. If people don’t stop smoking, then the tax isn’t very good public health policy, is it?
These are the problems we create when the government attempts to manipulate our behavior through the tax code.
In related news, starting a smoke shop on the North Dakota/Minnesota border is looking like a pretty good investment right now. As we’ve seen with other states that have hiked taxes on cigarettes, it inspires a lot of cross-border tobacco sales (not to mention black markets to avoid the taxes altogether).