Boycott Watch
Monday, October 1, 2007
Tennessee's new Cigarette Tax Backfires
Editorial by Fred Taub,
President, Boycott Watch

    On July 1, 2007, cigarette taxes went up in Tennessee, so much that Tennesseans who smoke are driving across the border to other states to buy their cigarettes to take advantage of lower prices due to the cigarette tax. As a result, Tennessee tax revenue from cigarette sales have gone down, not up as desired by the Tennessee state legislature.

   In response, the Tennessee Department of Revenue is having its agents monitor the cigarette purchases by people with Tennessee license plates in bordering states to see how many cartons of cigarettes they buy, even for their own personal consumption, radioing back to agents in Tennessee who make traffic stops to find out how many cigarettes their own residents are purchasing. By law, Tennessee residents can purchase up to two cartons of cigarettes without penalty. Purchasing more than two cartons is a first-degree misdemeanor, and possessing more than 25 cartons of cigarettes with tax stamps from other states, even for personal usage, is a felony in Tennessee, strictly because Tennessee want the tax revenue.

   Tennessee calls their patrolling agents across the borders a "pro-active education service" but that is clearly ridiculous - it is an attempt to rename an obvious cross-border enforcement that may in fact violate Federal interstate commerce laws, as people are lawfully buying products in other states, but that is for lawyers to determine in some later date, as the legality of these actions are surely going to end up in court in some future date.

   The fact remains, however, that Tennessee wanted to raise revenue through taxes, but did not expect a popular tax revolt as evidenced by their own citizens going across the border to save money. Higher taxes have resulted in lower revenue. If Tennessee wants to raise cigarette tax revenue, they would have been better off lowering their own in-state cigarette taxes thus competing with other states and getting people from nearby states to come to Tennessee to buy cigarettes, not penalizing Americans, and especially their own state residents for engaging in free market economics.

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 ©2007 Boycott Watch