What a Drag

If you wanted to buy a pack of cigarettes in New York City, be prepared for serious sticker shock. The taxes on a pack outweigh the actual cost of the pack by one and a half times.

The cost of the pack of 20 cigarettes sold by the tobacco companies is generally $4. Taxes now make up $6 in New York City, bringing the total cost of a pack to $10.

With a new 62 cent federal tax on cigarettes added this week with the passage of the State Children's Health Insurance Program law, the new price of a pack of cigarettes will soar past $10 in Manhattan.

The NYC price is higher than anywhere in the country and more than twice the national average. And beginning April 1, two-thirds of that cost will be made up of city, state and federal taxes.

That might have the effect of reducing the number of smokers as people look to save money where they can, and cigarette purchases might go down.

Of course, that means that the expected revenues to fund the S-CHIP expansion will fall short and money will have to be found elsewhere in the federal budget, but Democrats didn't seem to have a problem with that either.

The cigarette taxes have been falling short of revenue projections, meaning that not only are they succeeding in reducing smokers, but they're meaning that the programs that are funded from the cigarette and tobacco products taxes are falling short of their revenue projections at a time when money is tight at all levels of government.