Puff talk on taxes: tobacco tax revenues.

• Author: Tuccille, J.D.
• Position: Citings - Brief article

Looking both to raise revenues from cigarette sales and to discourage smoking, President Barack Obama wants to hike tobacco taxes. But jacking up taxes might not lead to the hoped-for bump in revenues: High tobacco taxes have already bred thriving black markets fully capable of evading additional levies.

A report by Michigan's Mackinac Center for Public Policy finds that tobacco taxes in much of the country are high enough to constitute "prohibition by price." The result is "a spike in smuggling-related criminal activity as smokers turn to illicit distribution channels." In New York, which has the highest cigarette taxes in the country, cigarettes smuggled from low tax states or from outside the U.S. account for 60.9 percent of the market.

Officials in New York City, meanwhile...