This Sin Tax Is Win Win

In an era of taxpayer revolt and fiscal constraint, politicians have latched on to a revenue source that generates little controversy and enormous revenue: tobacco taxes. The Clinton Administration advocates increasing the federal excise tax on cigarettes to 99c a pack from today's 24c to help pay for health-care reform. Fifteen states raised their cigarette taxes in fiscal 1993, and plenty more are considering similar measures.

Yet it's likely that as the tobacco tax bandwagon picks up speed, national and local treasuries will end up raising less revenue than they expect. Simply put: The cumulative impact from sharply higher prices could put off more consumers than most people are predicting. The less people smoke, the less revenue taxes on their cigarettes will generate.