Either tobacco taxes are designed to discourage the purchase of cigarettes or they're designed to raise revenue. 

But they aren't going to do both. 

Evidently, there are no longer enough people firing up lung darts to adequately fund all the anti-smoking and public health programs that partially depend on tobacco taxes — which is why public health advocates are now suggesting lawmakers nearly double those tax rates. 

As lawmakers have expanded the tobacco tax to new products and broadened the scope in recent years, revenue from the tax has, nonetheless, proved volatile. This instability is partially due to fewer Nevadans deciding to smoke, but it's also partially driven by the inherent consequences of punitively taxing certain behaviors, products or activities. 

In an effort to recoup some of the revenue lost to Nevadans purchasing fewer tobacco products, the Nevada Tobacco Control & Smoke-free Coalition has told lawmakers that hiking the tax would, ostensibly, generate more revenue while simultaneously pushing even more Nevadans to kick the habit — a win-win for public policy. 

Clearly, however, these people never heard of the Laffer curve, despite it being the basic economic premise behind such "sin taxes."

Simply put, the Laffer curve argues that there is a point where a tax rate can be so high, it actually collects less revenue by encouraging individuals to avoid the behavior or product being taxed. Well, the entire premise behind painfully high tobacco taxes is that the financial squeeze felt by consumers will encourage them to abandon their nicotine addiction in an effort to save their wallets, if not their health — which means, at some point, its success would naturally result in lower revenues. 

And with tobacco taxes, specifically, the prospect of consumers changing their behavior is especially likely, as a large proportion of smokers happen to be lower income and are therefore highly sensitive to rising prices. 

While pricing poor people out of the (legal) tobacco market may seem like a quick public health win, the regressive nature of such taxes tends to encourage a new sort of behavior that state coffers are going to like even less than Nevadans lighting up: tax evasion. 

As the prices grow more painful for their preferred vice, people will absolutely adjust their purchasing patterns. But not all of them will abandon the ritualistic act of sucking down cigarettes on their lunch breaks. Many will turn to alternative products or simply find ways of getting their hands on untaxed items from illegal sources. It's no coincidence, for example, that New York has the highest tobacco tax in the nation and the highest level of inbound smuggling activity for those very same products. 

As it turns out, smokers want to smoke, and many are willing to turn to the black market to feed their lust for that sweet, sweet cloud of nicotine when prices get too high — undermining the effectiveness of a tax designed to discourage their unhealthy life choices. 

After all, the tax rate isn't much of a disincentive if someone finds a way not to pay it at all. 

Another way for consumers to avoid such taxes is by shifting their consumption habits toward alternative products. Nicotine pouches, for example, are currently not taxed the same as tobacco products in Nevada, offering a quick buzz without the financial pain of purchasing a pack of smokes from the corner store. 

Unfortunately, many public health advocates are also pushing to include such products under the umbrella of "tobacco" items subject to high taxes. Gov. Kathy Hochul of New York, for example, included plans to subject pouches to the state's 75 percent wholesale tax on tobacco in her budget for the next fiscal year.  

Now, make no mistake, if it's merely about keeping public coffers flush with cash as more smokers swap out a pack of cigarettes for a puck of pouches, then such parity makes a bit of economic sense — in much the same way it supposedly makes sense for states to increase taxes on electric vehicles to make up for lost gas-tax revenue as consumers migrate away from traditional automobiles.

However, that's not the supposed intent of the public health advocates pushing for the tax hikes. While they may sell their preferred tax rates as a way to increase revenue in the short term, the bulk of their sales pitch is the same as it has always been: to impose economic pain on nicotine-addicted individuals in an effort to financially motivate them toward healthier lifestyles.

But if the ultimate goal is improved public health, rather than mere revenue stability, then taxing less harmful alternatives at a lower rate should be a public policy no-brainer. 

Indeed, the transition from combustible tobacco to less harmful alternatives should be something worth celebrating and even promoting through public policy. In Sweden, for example, the cancer rate associated with tobacco products has cratered in recent years as Swedes have overwhelmingly migrated away from combustible tobacco toward non-tobacco nicotine pouches in the past few decades. Compared to the rest of Europe, Sweden is a rousing success story when it comes to improving people's lives through the policy approach of encouraging "harm reduction."

From a revenue perspective, however, it doesn't really matter whether smokers switch to untaxed black markets, healthier low-tax alternatives or ultimately drop the habit altogether. In the end, lawmakers have to grapple with the fact that higher tobacco taxes, by design, will render future revenues unpredictable and volatile as consumer behavior changes in response. 

Such fiscal instability is a natural and highly predictable consequence of making it more economically painful for Nevadans to keep lighting up — regardless of the public health arguments for imposing such pain in the first place. 

Michael Schaus is a communications and branding expert based in Las Vegas and founder of Schaus Creative LLC, an agency dedicated to helping organizations, businesses and activists tell their story and motivate change. He has more than a decade of experience in public affairs commentary, having worked as a news director, columnist, political humorist and most recently as the director of communications for a public policy think tank. Follow him on Twitter @schausmichael or on Substack @creativediscourse.