by Katie Furtick, Candice Malcolm, Anthony Randazzo
January 09, 2014
Higher taxes do not necessarily lead to lower consumption or to higher revenues. Meanwhile, they clearly risk unintended consequences—including the influx of contraband tobacco on the black market, and increased demand for tax-free illicit cigarette and tobacco products. Moreover, lower taxes do not mean lower revenue for the government, as the smokers who relied on illicit, tax-free cigarettes have an incentive to switch to licit, taxed sales.