In its story about Maryland’s ban on single cigars, Budget & Tax News reports a very interesting phenomenon that has resulted in states with high cigarette taxes. Governor Perdue, of course, has proposed hiking the cigarette tax by $1 and tobacco companies are fighting back.
Experience elsewhere in the country suggests the Prince George’s ban could backfire. In Chicago, New York, and many other cities, high cigarette taxes have brought about “loose square men†who break up packs of cigarettes to sell them individually.
In Chicago, where local, state, and federal taxes add more than $4 to the price of a pack of cigarettes, some retailers in lower-income minority neighborhoods have been illicitly selling single cigarettes. Other “loose square men†operate on street corners, often selling single cigarettes for 50 cents each and no tax.
Selling cigarettes with no tax is illegal, but the loose square men take the risk because they can profit while helping lower-income smokers afford cigarettes. In many urban areas the selling of single cigars has begun in response to the same heavy tax burden that created single-cigarette sales.
