When are Pigovian taxes a win? When they happen in a border state!
I wrote back in September about how Illinois’ newly increased liquor tax would be a boon for Missouri stores. The Suburban Journals confirms my prediction:
Missouri tax revenue from wine and spirits has skyrocketed after Illinois lawmakers raised the state’s liquor taxes in September.
September’s increase over August: 41 percent
October’s increase over September 8: 6.5 percent
Not everyone can escape this tax when they want to purchase alcohol, but those who can will drive the extra few miles for cheaper liquor.
Proponents of the higher tax intended for it to fund infrastructure projects in Illinois, but Illinois lawmakers should have also taken into account that some marginal number of people would find other methods to procure their alcohol. At any rate, their state’s tax increase results in additional tax revenue for Missouri, because the state now captures many Illinois residents’ liquor, gas, and cigarette dollars, and whatever other purchases those Illinoisans make during their trips across the border.
(Thanks to MissouriLP for pointing me to this article.)
