Are cigarette taxes fair?

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On One Hand: They "Punish" Socially Unacceptable Habits

The public often accepts the excise tax on cigarettes, also known as a sin tax, because society views smoking as a poor habit. This tax is intended to raise money for projects for the public good, such as the construction of schools. The cigarette tax is one of the most effective and easiest means of raising revenue for a government: the cigarette tax can add up to over a $1 billion annually for a state.

On the Other: They May Succeed Too Well

Cigarettes contain highly addictive substances like nicotine. Making cigarettes prohibitively expensive will not curb this desire to smoke, but may induce people to turn to more cost-effective ways of consuming nicotine, such as by chewing tobacco. In addition, cigarette taxes are so effective at raising money that politicians are fraught with the choice between hoping people continue smoking in order to raise funds and trying to stop the proliferation of cigarette use.

Cigarettes taxes eat into the profit margin of the seller, possibly resulting in job cuts and lower wages. An increase in taxes will invariably lead some to sell cigarettes on the black market---which often involves violence and ties to organized crime.

Bottom Line

Taxes on cigarettes are legal, thus technically fair and unlikely to go away any time soon. In some cases, they are essential for a community to afford the services it wants. Additionally, the public tends to favor increased sin taxes over cuts in spending.

Source:

Investopedia.com: Sin Tax

USLegal.com: Sin Tax Law & Legal Definition

New Mexico Independent: "To sin tax or not to sin tax"

More Information:

New York Post: "New sin taxes, $1B cut to schools in Paterson's new budget"

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Are cigarette taxes fair?

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