I want to direct our readers to an amusing post on Missourinet by Bob Priddy about the positive consequences of assessing a lower tax rate on cigarettes relative to other states. He argues that the state should advertise it and encourage smuggling. He writes:
The best part–and this is why the health department needs to sign on–is that they’ll take the cigarettes back to Illinois to smoke them, meaning their later health problems will be issues for Illinois to deal with, not Missouri. So Missouri would profit, generating more money for education, highways, and maybe for health programs, and Illinois would have to deal with the problems smoking causes. […]
Let’s all root for Illinois to pass this dollar-a-pack cigarette tax increase.
It can mean so much to The Smuggler State.
States already do use selective tax rates to advertise products, to a certain extent. Recently, I saw such an advertisement for cigarettes on the Wisconsin-Illinois border.
I realize that the author is largely being facetious, but there is truth in his analysis that Missouri would likely experience benefits as a consequence of this policy. By keeping its tax rate on cigarettes low relative to other states, Missouri will encourage a marginally higher number of individuals to buy cigarettes in Missouri instead of in their home states.
