Wednesday, April 6, 2011

An idea to generate more tax revenue.. Loosies.

NY Times:  A Cigarette for 75 cents, 2 for $1.00: The Brisk Shady Sale of Loosies

“The tax went up, and we started selling 10 times as much,” Mr. Warner said. “Bloomberg thinks he’s stopping people from smoking. He’s just turning them onto loosies.”
America has a tax - hate relationship with cigarettes. We do everything we can to convince people to avoid smoking, from put a skull and crossbones warning label on the package to making smokers stand in the rain outside. But the State governments are just as addicted to tax revenue as smokers are to cigarettes. While health advocates are pleased that fewer people are smoking, politicians don't appreciate the reduction in tax revenue, so they do the what seems to be the obvious thing and increase the per-pack tax on cigarettes to make up the shortfall from fewer packs being sold. However, the Laffer Curve is at work here. The higher they raise taxes on a pack of smokes to increase revenues, the less revenue they collect because it convinces more people to quit smoking. As the story points out, it also creates an environment rich for a black market to thrive.

Here's an idea that I think is worth considering. Why not offer for sale cigarettes in 2 packs for the occasional smoker who doesn't want to invest an arm and a leg in a whole pack of 20? Currently, a consumer can only buy cigarettes in either a 20 pack, or a carton of ten 20 packs. If you have a hankering for one smoke, you either bum one from somebody or buy a whole pack. Now, these days, no one likes to bum smokes when they cost $10 a pack. But if you do go out and buy a whole pack, its not like you'll just smoke the one you wanted and toss out other 19. Chances are, you buy the pack for the one you wanted, and then finish the rest off over the course of the next few days or week even if you don't even want the rest of the pack. Heck, you spent $10.

Imagine if you could only buy beer in a 24-bottle case. period. No 6-packs, no tall boys, no jumbos, no double deuces. You want a beer? Buy a case of them chump. Sounds ridiculous, right. Well to me it does. Why does the Government force cigarette manufacturers to package their product strictly for consumption by mass users, hooked to regular smoke breaks? What about the rest of us who only want an occasional smoke and aren't hooked into a smoke every hour every day.

That's why that story from the NYT caught my eye. I think they should quit arresting and charging this guy with a crime and thank him for prompting the Government to realize how stupid and outdated the 20-smoke pack or else mandated marketing of cigarettes really is. If the States would allow the legal sale of 2 for a buck smokes, or something similar, they would increase tax revenue and prevent occasional smokers from becoming regular smokers because by the time they finished off that pack of 20 they wanted just one more


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