High cigarette taxes fuel a surging black market in smuggled cigarettes, notes Americans for Tax Reform's Patrick Gleason in the Wall Street Journal. New York smokers are the greatest beneficiaries of that black market, burdened as they are with the most ridiculous cigarette taxes in the country. There's a huge flow of smuggled smokes from relatively low-tax states like Virginia. And some smokers are turning to an alternative to which marijuana fanciers facing legal pressures of their own have resorted for decades: growing their own.
High tobacco taxes result from muddled policy goals implemented with the special incompetence that government officials bring to every task they undertake. Politicians simultaneously want to maximize revenue and raise taxes so high that they discourage once-again (this is an historical cycle) socially unacceptable tobacco consumption. Those are not compatible goals. What officials accomplish, instead, is a bonanza of unintended consequences. Notes Gleason:
Washington, D.C., experienced this firsthand after cigarette taxes were raised by 25%, to $2.50 per pack from $2, in October 2009. City leaders claimed the hike would generate a windfall of additional revenue. By February of 2010, D.C.'s chief financial officer reported that projections were off by $15 million. Revenue from the cigarette tax actually fell by $7 million after the hike.
That could be because smokers are quitting, accomplishing at least one policy goal, but it's not. Instead, consumers turn to other sources, with the black market's share of cigarettes in New York now standing at at 56.87 percent for 2012, according to the Mackinac Center. What to do? How about blaming Virginia for having lower taxes, and suing shipping services for actually running trucks into the state of New York that occasionally contain smuggled goods?
Oh yeah. And officials impose harsh enforcement of tax collection, to the point that Eric Garner dies during a tussle with cops that had its start in the sale of loose cigarettes.
Enforcement may have another unintended consequence, though, too, in addition to a booming black market. It's driving people to remember that tobacco, like marijuana, is a plant that's just not all that hard to grow.
New Zealand, an island nation that's consequently harder for cigarette smugglers to reach than New York is from Virginia, experienced a surge in homegrown tobacco this year after taxes were hiked. There, as in the U.S. it's legal to cultivate a patch for your own consumption, with the red tape accumulating only if you try to turn it into a commercial enterprise. "Entrepreneurial home tobacco plant growers are cashing in on the price hike and using websites and social media pages to sell tobacco plant seeds," reports the New Zealand Herald.
In his 2001 book, Tobacco: A Cultural History of How an Exotic Plant Seduced Civilization, author Iain Gately noted that the plant "is easy to grow on a non-commercial scale, and home-grown, with a modicum of care, will produce a satisfying smoke." An appendix to his book explains how to do exactly that.
New York City's Audrey Silk, a smoking rights activist, was profiled in the New York Times in 2011 for growing her own in Brooklyn. Her motivation, revealed not just in that article, but in the documentary below, should be familiar to Reason readers: she doesn't like being told what to do. For her, the cost savings of bypassing taxes is almost secondary to the finger she's flipping to anti-smokers.
A quick Internet search reveals that selling tobacco seeds, heirloom varieties included, has bloomed into a healthy cottage industry. Obviously, those sellers don't exist without buyers, many of whom are motivated by the tax-fueled rise in the price of smokes. In 2009 after big tax hikes, "some seed suppliers have reported a tenfold increase in sales," according to Fox News.
Then again, the popular culture of homegrown marijuana has thrived even without easy legal access to seeds. Demand finds its own supply. The ease of growing marijuana quickly overcame the laws against it, and produced enthusiastic hobbyists, as well as those willing to take the next step to illicit commercial production.
Growing your own tobacco is unlikely to become a universal curative for high cigarette taxes—or for outright prohibition, if we move in that direction. But as an adjunct to black market sources, it shows all the promise that home gardening did for ensuring availability of the last popular plant politicians tried to restrict.