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Sin tax hike could boost black markets

Sin tax hike could boost black markets

Editor's note: The story below quotes William F. Shughart, J. Fish Smith Professor in Public Choice at Utah State University.

U-T San Diego

By Steven Greenhut

SACRAMENTO — Anti-smoking activists have submitted to the attorney general a proposed ballot measure to boost taxes on a pack of cigarettes by $2, and use the revenues to fund research into the treatment of tobacco-related diseases. It’s the latest effort to crush smoking by significantly hiking the costs of tobacco.

“Increasing the cost of cigarettes has been shown to be the most direct and effective way to reduce smoking,” according to the proposed initiative’s findings. This proposal will "help advance medical research and prevent more kids from taking up a costly and dangerous habit," said Marsha Ramos, chairwoman of the American Lung Association in California, in a statement.

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New York City, for instance, has total taxes (state, federal and city taxes) of $6.86 for every pack of cigarettes, making the government the biggest beneficiary of tobacco sales there. “They’ve cranked up taxes and now recent evidence suggests that 60 percent of cigarettes sold in New York don’t carry a tax stamp at all,” explains William Shughart II, research director at the libertarian Independent Institute.

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