As predicted, New York managed to lose huge amounts of sin tax money
posted at 8:31 am on January 2, 2016 by Jazz Shaw
New Years is a good time for everyone to take stock of their performance over the past year and see what improvements might be made going forward, and this goes for states as well as individuals. Long time readers are already familiar with our repeated warnings about the use of oppressive sin taxes to fatten state government coffers and the questions which remain about the viability of such a strategy. In the Empire State in particular we’ve covered the flailing efforts of law enforcement to chase down the tobacco pirates who skirt the highest cigarette taxes in the nation. But the government keeps doubling down on the policy, insisting that they need the revenue. So how did that work out? At the New York Post, John Aidan Byrne has run the numbers and found that (surprise!) the government is seeing tax revenue plunge rather than increase.
Albany has really blown it — tax revenues from cigarettes are up in smoke.
New York state cigarette tax collections have plunged by about $400 million over the past five years, according to figures and estimates from the office of New York State Comptroller Thomas DiNapoli.
And New York has also lost $1.3 billion in uncollected state cigarette taxes each year from alternative sales, according to a separate study.
The state is taxing far fewer packs, as smokers evade taxed packs, shop across state lines or buy smokes from Native American merchants to avoid punitive NY taxes.
The first figure at the top really says it all. They’ve been either holding steady or raising the taxes on cigarettes for the past couple of decades but over the last five years – and in particularly this past year – the total revenue coming in from tobacco taxes has actually decreased by nearly half a billion dollars. Now, a sliver of that decrease came from people who quit smoking, perhaps at least in part due to the higher costs… and that’s a good thing. But assigning credit for the revenue losses in any substantial way to reduced smoking rates is unsupported by the facts. In 2014 the smoking rate among adults in New York City fell to 13.9% which is always a positive thing to see. Also, the smoking rate among teenagers has hit nearly all time lows. But the changes we’re talking about are in the range of a couple of percent. Also, the “decrease” comes in the form of gaining back a little ground after the smoking rate actually increased every year from 2010 to 2013 and we’re still nowhere near the all time low experienced in 2009.
So the real loss of revenue wasn’t seen because of vast armies of healthier people kicking the habit. As we’ve seen in too many places across the nation, New York fell victim to a massive increase in piracy. This past season the Village Voice took a spin around town and found that commercial brand cigarettes with no tax stamps on them were available virtually everywhere if you knew who to ask. And for the folks not purchasing flatly illegal, smuggled smokes, more and more people were smoking the off brand cigarettes from Native American reservations.
Meanwhile, the arrests that the cops do manage to make in their war against the smugglers manage to divert resources away from what the cops should actually be doing. Despite a number of press conferences being held last month talking about crime rates going down, specific violent crimes are actually up, both in the Big Apple and other metropolitan areas.
Despite lower crime rates in October, murder and rape are up for the year, 7.7 percent and 4.2 percent, respectively.
Other U.S. cities have also seen a jump in shootings and homicides in 2015, including Baltimore, Washington, D.C., Milwaukee, Chicago and St. Louis.
Just imagine how much lower those crime rates might be if the cops weren’t having to spend their time chasing down tobacco pirates. Sadly, we’ll probably never know since Democrats won’t let go of their sin tax loving ways, even when their own budget numbers show they’re losing money on the deal.