This article orginally appeared in The Washington Post January 29, 2026.

Public officials in Indiana drew attention and applause last month when they claimed that cigarette use had declined by 40 percent. They credited a $2 per-pack tax hike that took effect in July.

We wish it were true, but state officials made the common error of assuming a decline in legal cigarette sales meant fewer people were smoking. A closer look at the data tells a different story.

Theory and evidence show some will quit smoking in response to higher costs. Economics also teaches that people will seek out lower-cost substitutes. A 2012 study found that it takes a 100 percent increase in cigarette tax rates to reduce the adult smoking rate by 5 percent. So, when Indiana raised its cigarette taxes by 200 percent, it could have expected consumption to fall by roughly 10 percent, not the 40 percent lauded by state officials.

Indiana is now surrounded by states with lower cigarette taxes. Predictably, many Hoosiers responded by purchasing cigarettes elsewhere. Some crossed state lines to buy legally at lower prices. Others turned to illicit sellers. This kind of tax avoidance and evasion — what we call “smuggling” — undermines the health goals lawmakers hope to achieve by raising prices.

Read the full article.

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