The proposed cigarette tax.
I agree with Governor Huntsman's proposal to raise the cigarette tax in Utah. But we have to be careful not to go too high. Our current cigarette tax rate is 69.5 cents per pack. The highest in the nation is New Jersey at 257.5 cents per pack. On the Doug Wright show today, they said that New York has the highest rate. The state of New York does not, but it allows counties and cities to add an addition tax. The state tax is 150 cents per pack and the city of New York adds an additional amount to allow the taxes rate well above 3 dollars per pack.
The question is how high of a tax rate will cause people to bootleg cigarettes. Here are the facts about bootlegging to consider
First, they are highly addictive. It is doubtful that someone would drive an hour in either direction and be able to last the entire journey to wherever just for a pack of cigarettes. To really be effective, it would have to be done by the carton.
Second, our neighboring states have taxes on cigarettes as well. If Utah's tax were 3 dollars per pack, you would save 2.40 per pack by driving to Wyoming.
Most of Utah's population is quite isolated. The drive to Evanston is about 70 miles. The average car gets about 20 miles per gallon on the highway. So, a person would use about 7 gallons of gas for the round trip. It would take about 7 packs to pay for the trip.
Utah has the lowest smoking per capita in the nation, that would make the opportunity for a black market on cigarettes less likely.
It would only take a box or two make the trip highly profitable. It would be a difficult temptation to avoid.
Perhaps a more modest increase would be in order.
To eliminate the sales tax on groceries, why not a restaurant tax. People who prepare the food they eat at home are generally healthier than those who do not. Almost everyone goes out to eat every now and again.
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