Cigarette Taxes

Governor Jim Doyle wants to raise cigarette taxes. This doesn't affect me because I have never smoked and don't intend on smoking in the future. The reason for this is because raising the taxes on cigarettes will get more tax money for the state of Wisconsin to help the economy. This seems like a good idea to many not smokers but it also has its flaws.

Cigarettes are inelastic products. This means that the price of cigarettes can change, but the same amount of cigarettes will be purchased. This is because many people are addicted to cigarettes and must buy the same amount consistently regardless of the price. This is why it seems like a good idea to raise the tax on cigarettes. It will bring in more tax dollars to the state of Wisconsin while also encouraging smokers to quit.

The concern that I have is that cigarettes might not be as inelastic as Doyle thinks. I do agree that people are still going to be purchasing the same amount of cigarettes, but these people might not be purchasing cigarettes from Wisconsin. For example, neighboring states will be selling cigarettes cheaper. Also, tons of money can be saved if cigarettes are purchased online. New York previously tried raising the cigarette taxes and they actually saw a decrease in tax money coming from cigarette purchases in the long run. This is because people could save nearly $20 a carton in neighboring states and almost $40 a carton online.

Raising the cigarette taxes in Wisconsin seems like a good idea but this may not be the case. Many smokers are addicted and will continue to smoke the same amount regardless of the price, but the state of Wisconsin can't forget that raising taxes may encourage smokers to find other sources. Governor Jim Doyle must be careful before he raises the taxes on cigarettes too high.