Authors of a new paper on cigarette excise taxes find that people who smoke more — the authors call them “consumers who undertake more price search” — pay less of the excise tax than people who smoke less. The heavier smokers purchase cartons or purchase multiple cartons from lower tax states. This behavior can leave states with less revenue than expected.
If the goal of higher cigarette taxes is to help people quit smoking, it might only help the people who would have found it easiest to quit anyway — “non-daily smokers, less addicted smokers, and smokers of light cigarettes.” Those who start in one of these categories and decide they like or need the tobacco more may find it to be perversely cheaper to smoke more.
This, again, is why the state might reintroduce tobacco stamps.
