For fans of tax shifting, here’s a fascinating case study: cigarette taxes in New York City.

The combined city, state, and federal tax rate on a pack of cancer sticks in Gotham almost quadrupled from 88 cents in late 1999 to $3.39 by the middle of 2002. By the middle of 2003, smoking had been outlawed in bars, restaurants, and many other workplaces and public places. And the city launched an ambitious program to help New Yorkers quit, including the free distribution of nicotine patches by the thousands.

  • The result: the steepest drop in smoking rates ever recorded. Eleven percent of smokers quit in one year, and continuing smokers smoked less. The largest decreases were among the young, for whom quitting brings the largest health benefits. Nonsmokers’ lungs have been winners, too, because second-hand tobacco smoke is among the most dangerous forms of air pollution, in terms of its health effects.

    BC, Oregon, and Washington all have relatively high cigarette taxes already. At $1.43 a pack, Washington’s is the sixth highest in the United States. Oregon’s is tenth highest at $1.28. And British Columbia’s provincial cigarette tax, at Can$3.58 (US$2.58) is the highest state or provincial rate in North America. (The addition of a city tax makes the Big Apple’s combined tax rate the highest.)

    Some northwesterners are trying to follow New York’s example: a citizens’ initiative gathering signatures in Washington would replicate New York City’s prohibition on smoking in public places.

    P.S. In the category of unexpected findings: high cigarette taxes are statistically associated with happier smokers, according to the National Bureau of Economic Research. A head scratcher!