Tuesday, April 08, 2008

Cigarette Tax Revenue Won’t Meet Projections

I know… I’m surprised too. 

State cigarette tax collections jumped by more than 200 percent in February, but state revenue from cigarette sales could still fall short of projections for the full fiscal year if trends continue, according to the Legislative Fiscal Bureau.

[...]

Preliminary numbers for March indicate the revenue boom has slowed. According to Reinhardt, March collections were about $40 million, roughly a 77 percent jump from the $22.6 million collected in March ‘07.

Cigarette sales from October of 2007 through March have resulted in tax collections of about $207.2 million, compared to about $120.6 million for the same period in 2006-07, according to the Revenue numbers, including the preliminary March numbers for this year. Reinhardt said while it’s too early to call it a trend, if collections continue at this rate the revenue from the cigarette tax would fall some $10 million below the $448.9 million projection from the LFB. In the last fiscal year, cigarette tax collections came to $296.1 million, Reinhardt said.

I never would have thought that smokers would find an alternative to paying the ridiculous tax.

(6) Comments
Posted by Owen at 2253 hrs
Politics + Politics - Wisconsin

  1. I get your point, although I’d point out that an estimate is just that - a best guess.t

    $10MM on a $448.9MM projection is a miss by 2.2%.  I’d say that, all things considered, LFB did a pretty damn fine job in ballparking the figure.  It’s probably too early to tell if that miss is because of some kind of behavioral adjustment (either people quitting or buying cigarettes through other means), though it appears from the article that everyone can dredge up some anecdotal evidence in lieu of something meaningful.

    Sometimes we have to remember that people don’t model their behavior after mathematical projections from service agencies.  If the tax brings in 97.8% of what LFB estimated, I’m willing to call that a hit and not a miss.

    Posted by Recess Supervisor on April 08, 2008 at 2312 hrs


  2. Recess Supervisor brings up a good point about an estimate just being a guess.

    However I would be interested to know if in the process of formulating this estimate they took into account the estimated number of smokers who would quit as a result of this tax. Because that would skew the numbers a little bit.

    I would actually think that the State of Wisconsin would think a shortfall in this area is a good thing, because it means less people are smoking.

    However as we all know, When the State of Wisconsin issues a press release with the word shortfall contained anywhere in the document it just means TAX INCREASE somewhere else.

    Posted by Michael J. Cheaney on April 09, 2008 at 0843 hrs


  3. Shouldn’t the headline read “Cigarette Tax More Successful Than Originally Anticipated”?  After all, I thought the purpose of the tax wasn’t really to collect more revenue.  The primary purpose was to dissuade people from continuing a dangerous and unhealthy habit.

    The money collected was just an unfortunate side effect that couldn’t be avoided…. HA HA HA HA… I’m sorry… I can’t keep going on with a straight face.

    Posted by Nick on April 09, 2008 at 0857 hrs


  4. Nick, I know you are trying to make a joke, but you actually hit the nail on the head.  The purpose of the tax is to lower smoking rates and lessen the burden smoking causes on the state.  Less smokers means less tax dollars spent on smokers and long term, lower health care costs.

    Posted by .(JavaScript must be enabled to view this email address) on April 09, 2008 at 0931 hrs


  5. If they want to make people stop smoking just outlaw cigarettes and authorize insurance companies to deny any and all claims for health care that is caused by cigarette use on a going forward basis.  This BS game being played is really annoying.  The tax is on cigarettes because it is easy to justify and polite society hates smoking not because anyone in gov’t actually give a crap about your well being.  This is an openly and obvious regressive tax that hits poor people much harder than wealthy people yet the champions of the poor can’t pass these taxes fast enough.  Give me a break.

    Posted by .(JavaScript must be enabled to view this email address) on April 09, 2008 at 1220 hrs


  6. Less smokers means less tax dollars spent on smokers and long term, lower health care costs

    Wrong, John.

    Smokers do not live to a ripe old, infirm, age.

    They die fast and relatively young.

    Posted by dad29 on April 09, 2008 at 1723 hrs


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