Maryland Meets the Laffer Curve

Greedy politicians in Annapolis doubled the cigarette tax in Maryland for the ostensible purposes of reducing a budget deficit and financing more government spending. They increased spending (of course), but their tax hike is not generating much additional revenue. As the Washington Post reports, consumers are adjusting their behavior to minimize their tax burden:

Cigarette sales have dropped by nearly 25 percent in Maryland since the state’s tobacco tax doubled in January, as sticker shock apparently has curtailed some residents’ smoking and sent others across the border for better deals. Maryland lawmakers voted last fall to raise the tax to $2 a pack to help bridge a budget shortfall and expand subsidized health care. Fiscal analysts predicted that the new rate, the sixth highest in the nation, would cause cigarette sales to drop off, following a pattern with past increases. But the decline during the first six months of the year significantly exceeded their projections, exacerbating Maryland’s budget problems… Legislative analysts say they are looking at the degree to which Marylanders are crossing borders to buy cheaper cigarettes. It seems to be happening to some extent. On a recent afternoon, two service stations along South Dakota Avenue NE in the District were packed with vehicles with Maryland tags, many belonging to commuters heading to Maryland by Route 50 or the Baltimore-Washington Parkway. “The tax is not going to stop people from buying cigarettes,” said Mike Brockington, a 40-year-old Prince George’s County resident, adding that he was purchasing cigarettes in the District because of Maryland’s tax increase. … Maryland law seeks to limit out-of-state cigarette purchases. It is illegal for Maryland residents to be in possession of more than two packs of cigarettes lacking stamps showing that taxes were paid in the state.