Gov. Janet Mills’ biennial budget touts its rejection of broad-based tax changes. While it is true that the budget does not raise Maine’s income or sales taxes, it attempts to increase state revenue through a less direct but equally burdensome method: a proposed $1 tax hike on every pack of cigarettes sold in Maine.

Proponents of the tax increase argue that raising cigarette prices will reduce smoking rates. While this is a goal we all share, it is far from guaranteed. For example, New Hampshire’s adult smoking rate is significantly lower than Maine’s, despite having a cigarette tax of $1.78 per pack as opposed to Maine’s current $2 per pack tax. This suggests that other factors, such as public health initiatives and education campaigns, play a more significant role in reducing smoking rates than tax hikes alone.

Another concern is that Maine’s proximity to New Hampshire, where cigarette taxes are lower, will incentivize cross-border shopping. Cumberland and York counties, home to nearly 40% of Maine’s population, are within an hour’s drive of New Hampshire. If Gov. Mills’ proposal passes, Maine smokers could save $450 annually by purchasing cigarettes across the border. This loss of revenue for Maine retailers would also harm small businesses already grappling with rising costs and tight margins.

Even more troubling is the potential for a surge in illicit activity. High cigarette taxes have a well-documented history of encouraging smuggling. In New York, which boasts the nation’s highest cigarette tax, the Mackinac Center for Public Policy estimates that 54% of all cigarettes sold are contraband, smuggled in from low-tax states. This illegal market not only robs states of tax revenue but also circumvents critical safeguards like retail licensing and age verification. Maine likely would face similar consequences, with smuggling networks potentially establishing operations in cities like Portland, Bangor and Augusta. Rather than pursuing policies that hurt those who can least afford it, and incentivize criminal behavior, the Maine Legislature would be wise to pay heed to New York’s experience.

The underlying issue with relying on cigarette taxes as a revenue source is their inherent instability. Smoking rates continue to decrease nationwide, meaning revenue generated from these taxes will not be as great as projected. Meanwhile, the risk of fostering illegal activity is immediate and significant.

Gov. Mills’ proposal may appear to be a simple way to raise revenue, but the reality is far more complicated, as a tax increase of $1 per pack will further drain the pocketbooks of low-income Mainers, hurt Maine retailers and ultimately drain Maine’s General Fund budget.

Legislators should reject this unwise policy and work toward solutions that are both fair and effective.