Lessons in the Muck
To the surprise of few readers, I’m sure, after just the first quarter, Rhode Island is now more than $50 million behind its budget. (I’ll stick with my $150 million prediction for the mid-year review.) There is, however one interesting bit of information in the disheartening revenue picture (emphasis added):
The state derives its revenues from taxes and a myriad of other sources, including federal aid, licensing fees and departmental revenues which include the state Lottery. And some were up, including cigarette tax collections, which the state’s chief revenue analyst Paul Dion attributes to a hike this past summer in neighboring Massachusetts, where the cigarette tax is now $2.51, compared with $2.46 in Rhode Island. Dion pegged the average price of a brand-name pack of cigarettes at $7.09 there, $6.10 here. He believes the disparity in tax rates, minimum markups and price accounts for the $1 million-over-estimate surge here. Alcohol taxes were also up.
Do you suppose cigarettes are the only product, good, or service to which this dynamic applies?