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Stanford professor shares potential downside of an increased tobacco tax

Cigarette lightOver on the Huffington Post today, Stanford professor Keith Humphreys, PhD, raises several issues related to the proposed increase of federal tobacco taxes. The thrust of Humphrey's argument is that a heftier tobacco tax may reduce the observed smoking rate, but it won't reduce the actual use of cigarettes in America.

According to Humphreys, the U.S. policy on illegal drugs and its effect on illegal drug use provides useful insights on how an increased tobacco tax could influence cigarette use. And he describes in his article how extremely high tobacco costs could expand black markets:

Extremely high cigarette taxes are widely evaded. Professor David Merriman of the University of Illinois at Chicago organized teams of apparently non-squeamish research assistants to gather discarded cigarette packs from garbage cans and sidewalks in 100 Chicago neighborhoods. He discovered that 75 percent had no tax stamp, indicating a black market or grey market provenance.

An across-the-board increase in federal tobacco taxes would not only expand black markets in high-tax areas, it would also do nothing to address the widespread smuggling of cigarettes to high tax states from states where cigarette taxes are ridiculously low. Such smuggling is not driven by cash-strapped college kids with a few cartons in their backpacks. Organized crime groups, and even terrorist organizations, are the big players in the lucrative trade.


The challenge for federal tax policy on cigarettes therefore is to avoid feeding black markets in high-tax states, to shrink cross-state tobacco smuggling operations, and, to increase tobacco taxes in those states where taxes have room to grow without creating black markets. A flat increase in the tobacco tax cannot serve all three goals, but a more creative tax policy could.

Holly MacCormick is a writing intern in the medical school’s Office of Communication & Public Affairs. She is a graduate student in ecology and evolutionary biology at University of California-Santa Cruz.

Previously: Smoking rates increasing in the developing world, Study shows anti-tobacco programs targeting adults also curb teen smokingStudy shows smoking bans decrease kids’ exposure to secondhand smokeAustralia enacts world’s first ban on branded cigarette packaging and A conversation about the FDA’s new graphic health warnings for cigarettes
Photo by My Huy Streetphotography

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