January 7, 2008

Up In Smoke

Today we learn from the Associated Press that the Tennessee Department of Revenue's massive law enforcement dragnet to stop Tennesseans from bringing more than 2 cartons of cigarettes across the border - presumably to evade the state's highest-in-the-region cigarette tax - has resulted in the seizure of a whopping 31,000 packs of cigarettes.

Sounds huge, right? Let's do the math. Gov. Phil Bredesen originally proposed a 40-cent per pack tax increase on cigarettes, and said it would raise $219.6 million. If you divide $219,600,000 divided by 40 cents, you come up with a figure of 549 million packs of cigarettes sold in Tennessee in a year.

Those 31,000 packs of Lucky Strikes, Marlboros and Camels represent an incredible
0.005646 percent of the total volume of cigarettes sold in Tennessee each year.

Total revenue loss to the state if those cigarettes had made it past the dragnet: $19,200.

How many millions of dollars the Bredesen adminstration is spending on stopping cigarettes at the border?

Your tax dollars, up in smoke.

Update: The AP reports that the Department of Revenue is halting its border surveillance program to catch folks bringing too many cigarettes into the state at one time. They claim the program has served its purpose of educating people that only 20 packs of smokes can be brought across state lines at one time. My guess is they ran the numbers, did the math, and realized - belatedly - that spending a few million dollars to stop the loss of $19,220 in revenue didn't make sense.