OC Political

That might as well be the name of a pro-Proposition 29 campaign committee (OK, this isn’t an OC-only issue, but the November election is coming faster than we think). Prop. 29, which will be on the November 2012 ballot, would impose a 5-cent tax on each cigarette sold, or about a $1.00 a pack. The revenue, as it always does, goes toward one of those causes that no one can be against: cancer research. If approved by voters, it will amount to about a $1 billion tax hit on all those poor saps that are hooked on cigarettes. Prop. 29 creates a special commission that will dole out this these millions to whomever and wherever it sees fit – even out of the state or the country. In the best progressive tradition, the unshakable assumption is latest tobacco tax would be doled out by a special un-elected “commission” created by the initiative, on the naïve assumption that bunch of appoint “experts” can efficiently allocate these funds for the elimination of cancer and the betterment of mankind.

Who can argue with that?

Certainly not those social elements that make their money selling cigarettes on the black market. Any new law or tax that increases the price of cigarettes is like free marketing for them, creating customers who want to get more cigarettes for their money.

As Michael D. LaFaive,  Director of Fiscal Policy at the Mackinac Center for Public Policy wrote in a recent op-ed, “While cigarette tax hikes usually generate additional revenue for different units of government, they bring with them illicit activities, including smuggling by individuals and organized crime groups, violence against people and police and brazen thefts, too.”

Ultimately, LaFaive writes, “politicians don’t consider all of the costs of reaching ever deeper into consumer pockets…By hiking cigarette taxes so dramatically politicians are effectively expanding — if not creating — a highly profitable illegal market in which thieves and other people of violence can thrive at the great expense to consumers and job providers alike.”

Even with a cigarette tax below the national average, California has already started seeing the effects of increased smuggling. According to former Board of Equalization member Michelle Steel , “Cigarette-related crime is rising across the U.S. In California, 1.4 billion packs were estimated to have been consumed in fiscal year 2005-06. And 209 million packs were estimated to have been sold tax-free, resulting in a $182 million revenue loss for the state.”

This is a story as old as history. When government taxation of a service or product reaches a certain level, the incentive to evade, and to profit from evasion, becomes irresistible. This kind of taxation is always imposed in the name of a noble cause, and just as invariably turns citizens into criminals, diminishing respect for the law and ordinary government authority and habituating citizens to tax evasion. Prop. 29 will exacerbate that problem, in addition to the usual sins of raising taxes, empowering special interests and spending money on duplicative programs.

I don’t know about you, but I have about had it with funding every do-gooder program by piling yet another tax onto the backs of smokers. There is no more blood left to be squeezed out of that turnip.