I love stories like this. In 2010, Utah raised its excise tax on cigarettes from 69 cents to $1.70 a pack. Why did Utah do this? Call it prohibition through the tax code. A lot of folks in Utah don’t like smoking for moral reasons. They come to the same conclusion as obnoxious liberals from the Upper East Side, but from a different angle. They would like to see people stop smoking and hope to accomplish this goal through the tax laws. To be sure, some folks in Utah (and virtually every other state) see cigarette taxes as an opportunity to grab money for some good cause. And cigarette tax money grabs are easy when 1) smoking is bad for you, 2) the people who run the cigarette companies are jerks, and 3) not even the most progressive thinkers will criticize the regressivity of the tax. There might even be one person who thinks that the increased cigarette taxes are somehow tied to the externalities of smoking. That person would be a fool.
But here is what happens in a semi free society. People who want to engage in an activity that the government wants to ban somehow find a way. According to the Mackinac Center on Public Policy, one third of the tobacco smoked in Utah is smuggled in from states that have much lower taxes. The tax is 55 cents a pack in Wyoming, 57 cents a pack in Idaho, and 80 cents a pack in Nevada. So many Utahns figure manage to buy their cigarettes without paying the outrageous tax rates imposed by their state. While I am not a break the law kind of guy, I am neither surprise nor terribly upset that people do this. That someone wants to smoke, or drink, or do recreational drugs is no concern of mine. And it should not be the government’s concern. The Utah Tax Commission has an undercover SWAT team that is on the look out for people buying bootleg cigarettes. And that is a sad statement.