August 18, 2006
When New York City increased its 8-cent city tax to $1.50 in 2002 (on top of $1.50 in state taxes), sales in NYC dropped by half within three months, and stayed at about those low rates, Patrick Fleenor, chief economist at the Tax Foundation, told us. From 2002 to 2004, cigarette use by NYC adults dropped to 20 percent from 22.4 percent. So purchases dropped a lot faster than did use.