Taxes Blog

Finance Blogs » Taxes » Tax offices thankful for our sins

Tax offices thankful for our sins

By Kay Bell · Bankrate.com
Tuesday, June 22, 2010
Posted: 2 pm ET

If you have a bad habit you want to break, the tax collector wants to help. Really.

It's only for your good that an increasing number of states are imposing more and higher taxes on activities that lawmakers, usually armed with some advocacy group statistics, deem detrimental to our individual, or even society's, well-being.

Or so the taxing entities say.

New York is the latest state to rely on what are popularly called sin taxes. Effective July 1 Empire State cigarette smokers will pay an additional $1.60 in state taxes on every pack they buy. That will make the state's $4.35 cigarette tax the highest in the nation.

According to some calculations, the average price of a pack bought in New York will be about $9.20. Big Apple smokers will pay even more, nearly $11 a pack, thanks to the city's own cigarette taxes.

Other tobacco products, such as smokeless tobacco products and cigars also will encounter tax increases.

Now it's no secret that smoking and other forms of nicotine delivery pose cancer risks.

And lawmakers who've hiked such taxes over the years and who will continue to do so like to say the levy is to help us be healthier. Studies have shown that people, especially young smokers, do cut back or stop when the price gets too high for them.

Plus, say politicians, a healthier citizenry mean less stress on the health care system, leading to lower costs for us all.

They're lying.

No, not about the health care benefits of giving up bad habits, but that our well-being is the reason for the taxes.

States, and it is mostly states doing this, are raising these taxes because they're running out of money. Targeting our vices at least gives them some moral cover.

So if you're still smoking or drinking or doing whatever is deemed unhealthy, such as artificially tanning, thanks for your contributions to government operations.

Do higher taxes affect your activity choices? What's the most you'd pay for six pack or a pack smokes?

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
3 Comments
Skip Martin
June 24, 2010 at 6:08 am

Great piece.

I feel that it would have been prudent to also add the fact that, if successful, these sin taxes will achieve the exact opposite of the desired revenue generation effect.

This would/will leave the keepers of bloated state budgets in a situation where they will be continuously chasing diminishing tax revenues with other types of, less politically viable, revenue generation schemes aka income, property and sales taxes.

This is a particular concern for me as a Texan. Our state, due to misguided, unneccessary and politically motivated property tax reductions we find ourselves in a $18 billion budget deficit. I fear our legislators will pursue a similar path (OTP tax increases). Doing so will inevitably leave our legislators in a situation where our constitutionally mandated balanced budget can be made solvent through the introduction of a state income tax.

Just what we need.