At the beginning of this month a new tax on cigarettes took effect here in Minnesota. While proponents of the new tax claim it will help fund education the tax is actually being used to bailout billionaire Zygi Wilf since the proceeds from gambling having met the levels projected by the politicians who decided to provide public funding for the new Vikings stadium. Unfortunately, the politicians may have to find something else to tax now that cigarette sales have dropped:
DULUTH – After the Minn. state tax increase on cigerettes on July 1., Duluth tobacco shops and gas stations said their sales have decreased.
Some gas stations said cigarette sales are down by thousands of dollars a week.
Meklye Wahedi, a cashier at “Cigs for Less” said carton sales are especially down.
“People were buying 3 or 4 at a time, they would come in the next week and but 3 or 4 again, and yeah, it increased a lot,” Wahedi said. “When July 1 first hit, that’s when it was really slow.”
We will have to wait and see if sales increase but if they don’t the Minnesota legislation will likely have to create a new tax on something else. This demonstrates the issue with taxes, as taxes are increased individuals begin to avoid those taxes. If a new tax on cigarettes raises the overall price of cigarettes sufficiently less people will buy them and the state will take in less tax money, leading to more taxes. It’s a never ending cycle.