The Aug. 3 editorial “Closing a loophole” had its heart in the right place but missed the boat on suggesting implementable policy.
There’s a large cigarette-smuggling problem between low-tax states such as Virginia, where the commonwealth levies a 30-cent-per-pack tax, and New York City ($5.85/pack). But I can’t understand why this warrants an increase in the federal cigarette tax rate.
Even if Congress hiked the federal rate from $1.01 to $2, Virginia and New York City would still have the same differential, and smuggling would persist. What’s more, a federal tax hike would make selling fake cigarettes from abroad more profitable. In 2009, one source estimated that Chinese bootleggers produced 400 billion cigarettes to meet international demand.
Maybe it’s time to come to grips with the fact that we’ve taxed tobacco into de facto prohibition, and we should bring the rates down.
Scott W. Drenkard, Washington
The writer is manager of state projects for the Tax Foundation.