[movermike] movermike: South Dakota's Experience With Raising Ciggie Tax

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Posted by movermike:
South Dakota's Experience With Raising Ciggie Tax
http://www.movermike.com/posts/1176731073.shtml


   Note to Gov. Kulongowski:

     [1]RAPID CITY -- A big problem is looming for state government, and
     it all stems from rapidly falling sales of tobacco products,
     according to state Sen. Bill Napoli, R-Rapid City.

     Effective Jan. 1, the state tax increased by $1 for a 20-stick pack
     of cigarettes and by $1.25 for a 25-cigarette pack. The tax on all
     other items, such as cigars and chewing tobacco, jumped from 10
     percent to 35 percent of the wholesale price.

     Voters approved the increases in the 2006 general election.

     The 2007 Legislature passed bills to use extra money from the
     tobacco tax to boost spending on education, cut local property
     taxes and support health care for poor people.

     But Bill Napoli said the funding source already is starting to
     dwindle.

     "I am still laying awake at night looking at the ceiling, saying,
     'Who the hell thought this up? Who figured this deal out?' Because
     man, I'll tell you what, this is going to be a mess in the next two
     to three years," he said.

     Officials said tobacco sales dropped dramatically in the first
     three months of 2007.

     And Napoli said he expects a 50 percent sales drop within the next
     five years, adding that the effects will already be evident during
     the 2008 legislative session.

   Basic Economics 101: Price goes up, Demand goes down.

   [2]Cigarette Tax [3]Oregon [4]Healthy Kid's Plan [5]Mover Mike

References

   1. http://www.rapidcityjournal.com/articles/2007/04/16/news/top/news00l_napoli_tobacco.txt
   2. http://technorati.com/tag/Cigarette+Tax
   3. http://technorati.com/tag/Oregon
   4. http://technorati.com/tag/Healthy+Kid's+Plan
   5. http://technorati.com/tag/Mover+Mike