Gov. Rendell is living in a pipe dream if he really believes a 10-cent-per-pack cigarette tax hike will bring $50 million to state coffers, especially considering the recent passage of a 61-cent increase in the federal tax to fund the health-insurance program for children.
Tobacco taxes have never been the revenue boon advocates claim them to be. They rely on a narrow and shrinking tax base, while driving an increase in smuggling. The experience of other states confirms that these hikes usually result in lower-than-projected revenue. The state should focus on long-term budget solutions such as capping taxes and expenditures and reducing the cost of government programs and services by partnering with the private sector more.
The Heartland Institute
This Letter to the Editor was originally published in The Philadelphia Inquirer.