On Saturday, Louisiana voted on five proposed amendments to the state constitution. Three passed, including an amendment which renews a 4-cent tax on cigarettes and sends some of the money from that dark-brown, sun-cured goodness to TOPS.
The tax was set to expire next year, but this amendment effectively sets the higher tax level in place permanently, up to 36 cents.
But LSU smokers need not be totally discouraged. The tax isn’t actually going up at all. It’s just not going down next year. So, for all of you who enjoy a pack every once and a while, no worries. Your already-expensive cigarettes won’t get more expensive because of this amendment.
TOPS will also get a boost in cash, to the tune of some $80 million for the current fiscal year, according to The Associated Press. So, things aren’t all that bad for LSU smokers, especially if you enjoy TOPS.
Many so-called “sin taxes” aim to discourage certain behaviors by making them more costly, all while benefiting from the tax money.
At least that’s the platform they use to get the votes they need.
It’s an easy push politically. Say the problem is obesity. We want to decrease spending on low-quality food, so we tax the hell out of fatty, low-quality foods. Opposition is hard to find when you oppose such an easy target.
But reality is a tough mistress, and small price changes rarely have any significant effect on spending when we’re talking about things like food preference, drugs, alcohol, gas, cigarettes and the like.
Consider the friendly smoker who is always just one good tax hike from “finally giving it up, bro,” but never actually quits.
In economics, it’s called elasticity, and it’s one of my favorite parts of the field because it shows the real humanity behind the numbers. During the late 2000s recession, U.S. spending on alcohol continued right on up, clear through the recession, because hell, times are tough and we all need a drink, apparently. We call that inelastic, and all the good stuff tends to be inelastic.
It is the good stuff, after all.
Similar principles are at work with cigarettes. A paper in the October 2008 journal Public Health polled some 483 Taiwan residents and found that a massive 44 percent increase in the price of cigarettes would only lead to a 12.87 percent reduction in purchases.
In other words, even when these smokers were just asked if they would quit if cigarettes reached a certain price level — the most optimistic situation I can imagine — the results still weren’t very impressive.
Generally speaking, smoking is more common among lower income levels, so many commentators, both political and economic, have expressed concern over the tax being “regressive.”
That is, a tax hike of any size is tougher on those with fewer resources.
But to be honest, our 4-cent tax — which isn’t even an increase, just not a decrease — won’t be affecting many people, no matter what their income.
The change may be small, but the cumulative effect can be huge, and that’s where these taxes really shine — makin’ that money.
See, when the Man is in need of a quick buck, he has to raise taxes. This isn’t totally true for the U.S. financial system, but it’ll work. If he taxes something like say, hot dogs, people will buy fewer hot dogs, and more hamburgers. No one buys hot dogs, and no tax revenue is collected.
The Man is left empty-handed, and rest assured, we may not feel “trickle-down economics” when it’s surplus working its way down, but deficit trickles just fine.
No good news there.
So, we tax something like gas. Economists know we’re pretty much stuck on our gas spending, so it’s a near surefire way to raise cash.
And that’s what “sin” taxes do well — raise money. Even with absurd increases, tax increases are not an effective deterrent.
So, support your favorite South Eastern Conference school this season. Buy a pack.
 
Devin Graham is a 22-year-old economics senior from Prairieville. Follow him on Twitter @TDR_DGraham.
 
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Contact Devin Graham at [email protected]