Welcome to Rye Country Day's Economic Blog. Here you will find perspectives by students taking Economics at Rye Country Day School. It is meant to be a forum where students can openly express their ideas and take positions on relevant economic issues. I urge everyone to participate in presenting their own ideas in an open manner so that we can all learn from each other. Regardless of whether you are currently taking Economics, everyone is invited and encouraged to comment on articles and get involved. Feel free to e-mail me, Alex Osborne at alexander_osborne@rcds.rye.ny.us , with comments or suggestions.

Monday, December 11, 2006

Featured Entry - Tax free Cigarettes

Right now there is no tax on Indian cigarettes and they are significantly cheaper. Indian reserves are like a Costco for cigarettes because when people have the chance they like to buy a lot at once and save some money (I know Costco has taxes but the whole buying in bulk idea carries over). NY state is trying to pass a law that would place a tax on the cigarettes. NY state loses about 600million dollars a year to untaxed cigarettes and now wants part of that money. The new tax would be about $1.50 (still less than other cigarettes). The tribes are worried because most of the revenue they make is from tax-free cigarettes and if the tax is imposed their revenue would be significantly less. The tribes would be in serious trouble if this law is imposed and it is unfair to impose the tax so all of a sudden. Maybe if the government did something to keep them in business but they can't just take away such a large part of their revenue and not expect consequences.

-Marianna daCosta


philip said...

What is 'unfair' is that there is a way to get around one of the most important taxes in this country. The cigarette tax is not like the taxes on most other products, but more like the taxes on gasoline and the proposed taxes on trans-fats or carbon monoxide. They are punitive taxes that were put in place in order to try to change buying habits. The reasoning goes that if people cannot afford their addiction, they are more likely try to quit, a reasoning many studies have supported.

Also mentioned, these punitive taxes do raise huge amounts of money for state and local government, money that is needed. A greater amount of money in the system could do any number of things that would benifit the population as opposed to leaving these cigarettes untaxed when they only have the power to harm. This is a time when ethics simply complements economic practise, and when that happens, what must be done is simple.

Yes, the tribes may suffer if this rule goes into place. However, their cigarettes will still probably sell well since they will still be cheaper than other brands.

joshua Miller-Frankel said...

These taxes are a huge part of the revenue for our government but their are ways to avoid paying the higher taxes in certain areas. For example, the tax on cigarettes in the city is 3 dollars for one pack. Now you might be saying that would make people not want to buy their cigarettes. But these people will go to an indian reserve or by the cigarettes tax free in bulk so they dont have to pay that outrageous tax. So the pattern of use doesnt really change it just allows people to buy their cigarettes some place else and thats money the city looses out on.