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Lance on Regulation
October 08, 2003Bootleg Butts and the Power Wonks"Bootleg Butts and the Power Wonks" by Garry Reed High Tax Blamed For Rise In Smoking My first reaction to that Daily Mail headline was the classic furrowed-brow slack-jawed squinty-eyed "Huh?" How does raising cigarette taxes cause increased smoking? Wouldn't higher taxes cause decreased smoking? Eventually, 100 watts of GE Soft White winked on above my head. Of course. Smuggling. Seems the Brits had just discovered the Law of Unintended Consequences. Jacking up cigarette taxes made it profitable to sell bootlegged smokes on the black market (or what libertarians fittingly call the Free Market). But while smuggling makes cigarettes cheaper, how does it increase the actual number of smokers? One way, the article enlightens us, is the practice of hawking cigarettes out the back of vans to school children. Surprise! Smuggling drives out legitimate business and attracts less virtuous entrepreneurs. Read It Rating: 4.5 Comments
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