It is true that the law of supply and demand dictates that a higher price means a lower quantity is demanded, but funding S-CHIP with Federal Cigarette Tax Increases is a Poor Tax Policy. A cigarette tax increase hurts the poor more than virtually any other way of raising money. High Cigarette Taxes Encourage Smuggling and Associated Crime.
It is often said that cigarette taxes should be increased because government needs revenue. Such an argument is possibly the worst used by advocates of higher cigarette taxation. Why not tax coffee or spinach or impose a tax based upon the number of blades of grass in a taxpayer’s yard? Just because the government needs revenue to fund some general spending program that has broad benefits doesn’t mean that an arbitrarily selected group of people should pay the tax. o_O