Sin All You Want, We’ll Tax More

Posted: 06/18/2009 by that's Elbert in Delaware, taxes
Tags: , ,

A FreedomWorks press release brings this back to mind:

Delaware is the latest state to jump on the tax hike bandwagon with a plan to raise taxes on cigarettes and alcohol to bridge a looming budget gap.  These so-called “sin taxes” seem to be the first place politicians go for some quick cash anytime they can’t pay the bills.

A recent proposal would raise alcohol taxes by two cents per 12-ounce can of beer, three cents per 5-ounce serving of wine, and 15 cents per bottle of liquor. The state cigarette tax would see a $.45/pack hike.

A better idea would be to take advantage of the free market and lower the tax on these items below the levels of our neighboring states. It would drop the prices at the stores and bring residents from neighboring states into Delaware to buy these products. There’s a good chance those customers may be buying other goods while they are here. It could build business in the state. It’s certainly worth a try.

FreedomWorks points out that raising sin taxes in New Jersey was a bomb:

Delaware doesn’t need to go down the path of higher taxes that nickel-and-dime citizens.  State legislators need only look up I-95 to New Jersey to see the effect cigarette tax hikes have on the budget.  A Heartland Institute study shows that for two years running, the tax hikes have led to reduced revenues, not the millions the state was banking on.

New Jersey was left with a still gaping budget hole and businesses were hurt as smokers turned to the Internet, Indian Reservations, and the black market for lower priced cigarettes.  This is a common scenario when legislators go after a minority of citizens for the funding woes of a state.

It would be worth a try. After all, we’re taking a gamble on sports betting, why not try lowering sin taxes? Although we are in an environment where a legislator can make a statement like this without any problem:

[Rep. Pete] Schwartzkopf: “I’m not under any illusion that anyone in this room is in favor of raising taxes, but we were elected to do it.” (link)

Would those that elected Rep. Schwartzkopf to raise your taxes please stand up.

(crossposted on DelawarePolitics.net)

Appendix:

In the light of this subject, I wrote on Twitter:

Am I crazy for wanting to have more people “sin” in DE so we have the money? Morally I oppose smoking & drinking.

To which fellow blogger Mike Mahaffie replied:

…yes

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Comments
  1. The way the gas prices are headed (again) no one’s going to travel here from neighboring states to sin, the tax savings will be more than canceled out by the gas prices.

  2. Michael says:

    It didn’t work in Maryland either.

    What never ceases to amaze me is the Left’s complete misunderstanding of dynamic economics. If you raise the price to acquire something a person finds valuable they’ll go elsewhere to get it (within reason). That’s why you find furniture stores and other big-ticket item providers so close to the Maryland line. Thus, if it’s cheaper to buy cigarettes or booze across a state line there’s a pretty good chance someone will go and get it there.

    Have these people ever had the thought of (gasp!) government doing without (that is, making cuts)?