New York Cig-tax hike creates total drag on sales

The New York Post reports:

ALBANY -- Sales of taxed cigarettes have plummeted a staggering 27 percent statewide since the highest cigarette tax in the nation took hold in July, a Post analysis has found.

Law-abiding cigarette dealers have sold an average of 30 million packs of smokes in each of the last four months -- some 11 million fewer than before Gov. Paterson and lawmakers raised the state tax on cigarettes to $4.35 a pack in a scramble to close a massive budget gap.

Such a drop in smoking would exceed even the wildest imaginations of anti-smoking advocates, who estimated the arrival of the $10 cigarette pack would trim sales by 8 to 10 percent as cash-squeezed smokers cut back or quit.

The law of diminishing returns from taxation is here on high cigarette taxes in New York state. The Laffer curve in action.