ABC's Dr. Johnson Prescribes Higher Taxes to Get Smokers to Quit
Marking the one-year anniversary of longtime smoker Peter Jenningsâ death from lung cancer, ABCâs Dr. Timothy Johnson wrote up a prescription as outdated and ineffective as bleeding a patient: growing government.
âAt the government level there are three proven techniques. One is to raise prices by increasing taxes, the second is to limit access by minors, and the third is to conduct mass media campaigns,â Johnson said on the August 7 âWorld News with Charles Gibson.â
Although ABC's medical editor went on to slam government for having âdropped the ballâ on his prescription, anchor Charles Gibson didnât include anyone with a second opinion.
If he had, that person could have mentioned a 1998 study by Cornell University, which found that âa $1.50 a pack tax boostâ on cigarettes would only âreduce the number [of smokers] by about two percentage points.â
One reason for the lack of drop-off in smoking is that heavy taxation merely encourages consumers to seek untaxed tobacco. High tobacco taxes encourage cigarette smuggling, tax evasion and black markets, while ultimately losing governments millions in revenue.
Cato Institute senior fellow Robert Levy wrote on March 20, 1999, that âa $1.00 bump in priceâ from tax hikes âwill mean $23 billion in potential black-market profitsâ for bootleggers, about four times the U.S. net income of Americaâs largest tobacco makers.
Four years later Tax Foundation economist Patrick Fleenor took an in-depth look at how high taxes on cigarettes create a crime-ridden black market for smokes, and a year later the General Accounting Office (since renamed the Government Accountability Office â GAO) found similar results.
âAs cigarette taxes increase, so do the incentives for criminal organizations, including terrorist organizations, to smuggle cigarettes into and throughout the United States,â USA Today reporter William Welch quoted the 2004 GAO study in his July 24 article on a proposed 300-percent tax hike in California.
While Fleenorâs study centered mostly on New York Cityâs experiences with a black market, he found that smuggling related to tax evasion is a global problem.
âGovernments around the world have responded to growing concerns about smoking and health by raising cigarette tax rates,â the economist wrote, adding that âaccording to the World Health Organization, some 20 billion packs of cigarettes are smuggled internationally each yearâ resulting in ârevenue losses of between $25 billion and $30 billion annually.â
Like New York Cityâs experience with mob violence tied to cigarette smuggling, high-tax countries âhave experienced considerable problems with the crime associated with cigarette bootlegging.â