Warning: Higher Cigarette Taxes are Bad for your State Budget

Warning: Higher Cigarette Taxes are Bad for your State Budget

August 12, 2008 Posted by J. Scott Moody - No Comments

A recent Wall Street Journal editorial about Maryland’s recent cigarette tax hike should give pause to Maine lawmakers who wish to further increase Maine’s high cigarette tax.  The article states: “Politicians in Annapolis are scratching their heads wondering what happened to all those chain smokers who were suppose to help balance Maryland’s budget.  Last year the legislature double the cigarette tax to $2 a pack to pay for expanded health-care coverage.  Eight months later, cigarette sales have plunged 25% and the state is in fiscal distress again . . . residents in Maryland’s Washington suburbs can shop in nearby Virginia, where the tax is only 30 cents per pack, and save at least $15 per carton.”

Of course Maine’s “Virginia” is New Hampshire where cross-border shopping by Mainers is a well-known phenomena.