I don’t smoke, my friends don’t smoke, and cigarettes have long since killed the vast majority of my family members who used to smoke. I am, however, from a tobacco state, from a family with a history of farming tobacco, and am attending a school that, even with non-smoking signs plastered around campus, was funded largely by tobacco dollars.
I read a case study earlier this week analyzing how pure economic research into the “price elasticity of demand” for cigarettes eventually grew into a lobbying and policy effort to curb youth smoking through an increase in the federal excise tax. The article and the class discussion that followed addressed some important factors of “sin taxes” that one most consider — namely, if you tax the vice out of existence, the government loses that stream of revenue. Such issues are complex and solutions cannot simply be summed up as right or wrong; one must be prepared to re-frame the problem, as expected outcomes often go awry:
With the possible exception of the hydrogen bomb, nothing in modernity is more generative of paradox than cigarettes. Thus, in 1955, when the Federal Trade Commission sought to curb misleading advertising by banning the publication of tar and nicotine levels, the ruling proved to be a boon to the industry, enabling it to advertise filter cigarettes for their implicit safety even as it raised the toxic yields to compensate for the filters. So it went with the 1965 law requiring warning labels on cigarette packs, which preempted potentially more stringent state and local regulation and provided a priceless shield against future liability suits. So it went, too, with the 1971 congressional ban on broadcast cigarette advertising, which saved the industry millions of dollars, effectively froze out potential new competitors, and put an end to the devastating antismoking ads then being broadcast under the fairness doctrine. Even such left-handed regulation as the 1982 increase in the federal excise tax benefited the industry, which used the tax as a screen for a series of price increases, doubling the price per pack in a decade, and invested the windfall in diversification.
Every forward step taken by government to regulate smoking–the broadcast ban, the ban on in-flight smoking, the welter of local bans on smoking in public places–moved cigarettes a step further back from the consciousness of nonsmoking voters.
– Jonathan Franzen, “Sifting the Ashes”
