Between the recent federal tax increase in April and the state tax hike that went into effect earlier this July, cigarette prices have nearly doubled in just three months. At the start of 2009, I could pick up a carton of smokes for about $28 after tax – and the current cost is closer to $48.
Of course, my recent trip to Ireland helped me realize how good we still have it.
The first day we arrived, Aisling’s uncle wanted to take us for a drink and a meal at the neighborhood pub. Oddly enough, smoking wasn’t allowed in the pubs (or anywhere really), so I joined the crew of outcasts enjoying nicotine in the windy rain.
A younger guy approached me, flashing a 10 Euro bill (about $15) and begged me to buy him some cigarettes. I tried to decline – even insisted that I had literally just walked off the plane and didn’t want to get in to trouble. I didn’t ask his age, but he had the persistance of a slightly-underage addict that I could relate to all too well from my days of loitering around the convenient store and waiting for someone willing to acquire a pack of Marlboros.
Well fine, I couldn’t get rid of this guy so I offered to sell him a pack of cigs I brought with me from the states. I originally paid about $32 for the carton, so I figured a fair price would be at cost. When I asked for 2 Euro in return, he looked shocked – but in a way that he didn’t want to miss the opportunity.
He exclaimed “Stay right here, I’m going to get change!” and he dashed into the pub. A few moments later he handed me 2 Euro and seemed to display a brief moment of guilt. “Are you sure you only want 2 Euro?”
“Yeah, sure, that’s all I paid so its only fair.” Of course, I never thought to ask how much they cost on that side of the pond.
A few days later, the few packs I brought started running low. We were still staying in Dublin at that point, so that corner pub was the closest shop. I fished a few coins out of my pocket and walked up to the bar to order a whiskey, a coke, and a pack of Marlboro Lights.
“That’s the price: 8.50 eu for the cigarettes, and 5.50 for the mixed drink.”
And at that moment, I realized I was willing to pay about 13 US Dollars for a single pack of smokes – and maybe our sin taxes aren’t so bad.
In Northern Ireland, the tax is a little bit lighter. Packs are sold for about 7 euro ($10-11) or you can buy loose tobacco and 20 rolling papers for about $4. No wonder everyone was rolling their own smokes…
Economically Regressive, Medically Progressive?
By definition, cigarette taxes are regressive – people with lower incomes end up spending a higher percentage of their wealth on the tax itself. Rich people don’t really smoke more cigarettes than anyone else who smokes, they just spend a much smaller part of their income on the fix.
At the same time, sin taxes are popular because they may theoretically bolster progressive goals like reducing illness and funding for medical care. Gas taxes sort of work the same way: They’re a heavier burden on the working poor but they theoretically accomplish the goals of reducing consumption and funding environmental cleanup. Then again, I remember when they told us the lottery was going to fund education and college scholarships. That lasted a few years before they finally decided to slash the scholarship budget and transfer the lottery proceeds to the general fund.
So I’m a bit mixed on it all. I certainly don’t enjoy spending near $50 for a carton of cigarettes but there are probably worse ways the state could try to raise revenue. At least they haven’t put a sales tax on food yet – that would be an incredibly destructive and regressive tax.
In the meantime, I’ve had to dust off the corn cob pipe to save some cash. While the price of pipe tobacco has also doubled in the last few months, it is still the only way to get a nic-fix for less than $20 a week. Of course – it could be a whole lot worse.