By George Anderson
Lorillard Tobacco launched an ad campaign on Wednesday in Delaware, New Jersey and Pennsylvania claiming higher taxes on cigarettes is putting money into the pockets of gangsters. The three states are currently considering increasing cigarette taxes.
The "No Tax, No Crime" campaign focuses on the New York City experience with higher cigarette taxes. A pack of tier 1 cigarettes sold in any of New York's five boroughs costs approximately $7.
Bob Shepherd, a former New York state deputy tax commissioner and a spokesperson for Lorillard's campaign said in a released statement, "There are examples and cases brought forth every day related to illegal sales to minors, illegal tax stamps, counterfeit product, and seizures of hundreds of thousands of cartons of illegally smuggled cigarettes -- all of which has increased after New York hiked its taxes. It does not take a genius to figure out the outrageous profits that can be made by driving a short distance, buying cigarettes at more than half the price, then smuggling them into the Northeast. This is a problem that has besieged an already stressed New York law enforcement system, and the problem will only get worse. Simply, using tax policy to punish a certain segment of our population only helps those people who want to break laws -- and ultimately, everyone pays for it."
Moderator's Comment: What has the been the impact of so-called "sin taxes" on consumer behavior, retailing and government?
Firstly, we understand Lorillard has a vested interest in lower cigarette taxes. There is a correlation between price and the numbers of smokers. That's why it doesn't take a genius to figure out consumers will buy cigarettes wherever they can get them at the lowest price. For some, that means purchasing illegally smuggled product. For others, it may mean stocking up at a store on a Native American reservation or bringing cartons back from a vacation in Virginia.
Sin taxes have never been a good idea and they never will. [George Anderson - Moderator]