EDITORIAL: Where there’s smoke …

Gov. Brian Sandoval has proposed a $7.3 billion general fund budget for the next biennium. To help fund that budget, he has decided that where there’s smoke, there should be higher taxes.

As reported by the Review-Journal’s Sandra Chereb, Gov. Sandoval’s plan includes an increase in the excise tax on a pack of cigarettes, by 40 cents to $1.20. The increase, projected to grow cigarette tax collections by $80 million, would mark the first hike in Nevada’s cigarette tax in more than a decade.

Ms. Chereb also reported that e-cigarettes will get a close look from lawmakers. A bill pre-filed on behalf of the Nevada Taxation Department would categorize products containing liquid nicotine as “other tobacco products,” subjecting them to a tax rate of 30 percent of the wholesale price, similar to the taxes assessed on cigars and chew.

Everyone knows that when you tax something, you get less of it. The problem with raising cigarette taxes is that policymakers do it not just to pay for government services, but to discourage a behavior. So with each round of cigarette tax increases, be it at the city, state or federal level, governments get less — less smoking, and therefore less taxable cigarette sales to pay for budgeted services.

As for e-cigarettes, how can they be classified as “other tobacco products” and taxed as such when they have no tobacco in them? Isn’t it enough that e-cigarettes and the flavored nicotine “juice” they use generate sales tax revenue while furthering the state’s goal of reducing smoking?

We’re not yet ready to support or rule out any element of Gov. Sandoval’s tax plan. Nevada’s cigarette tax is the 15th-lowest in the United States. An increase would not make Nevada’s rate a regional outlier.

But it’s worth reminding lawmakers that when they raise sin taxes so high that the poor can’t afford legal products, the black market flourishes, generating even less revenue and opening the door to unintended consequences. Look no further than the Eric Garner case in New York as a cautionary tale.