Tax cigarettes, not clothes

I was glad to hear that Corzine's budget advisors advised against a clothing sales tax in New Jersey, according to the Star-Ledger. The lack of sales tax IMHO is one of the things that helps keep New Jersey viable for consumers and businesses, especially out-of-state consumers. I come from the perspective of someone who grew up in Westchester County and used to go shopping in Paramus several times per year because of the lack of sales tax. Not only do out-of-state shoppers buy clothing, they eat in restaurants, buy gas in New Jersey, and pay tolls on the Parkway and Turnpike.

But the Republicans who are railing against any taxes are playing politics and not living in a reality-based world. New Jersey is going to have to attack our $5 million deficit from many directions. A gas tax is not out of the question, but I think the best way to increase revenues is to bump up the cigarette tax. Yes, New Jersey is already second in the nation when it comes to our cigarette tax (we tax a whopping $2.40 per pack, second only to Rhode Island which taxes $2.46 per pack), but why not be number one in something? With the law making it illegal to smoke in bars and restaurants taking effect in April, it makes sense. It is not only a matter of revenues but a matter of public health. Smokers cost the state $2.9 billion each year in health care costs.

The tax is regressive in a way, because a higher percentage of working class people tend to smoke cigarettes, so it will take a larger chunk of their income than rich smokers. But as a smoker who is trying to quit, I see the use not only in terms of health but also in terms of money. I'm struggling, but in the past week I've bought only two packs of cigarettes, compared to the usual four or five, and it makes a difference in my wallet. I believe that cigarettes should be illegal anyway, so a cigarette tax is a logical move for me and I advocate a sharp increase - perhaps to $2.60. That would be a significant increase in revenues each year, provided people keep smoking.

One argument for raising the cigarette tax is that New Jersey ranks 46th in the number of adults who smoke each day. I have no data that show a correlation between that figure and our high tax, but it can't hurt to raise the tax some more.

More information on the cigarette tax can be found here at the Policy Research Institute for the Region at Princeton University.