Cross-border taxation

The last North Dakota town along the interstate highway before hitting the Montana border is Beach. Along the highway leaving Beach, there is a billboard reminding Montana residents who purchased cigarettes in North Dakota that it is the law for them to pay the Montana cigarette tax — it urges consumers to "do the right thing" and pay the tax.

It seems that Montana's cigarette tax is almost four times greater than North Dakota's ($1.70 per 20-cigarette pack in Montana vs. 44 cents in North Dakota). Thus, it's not far-fetched to think that some enterprising Montana smokers might stock up in Beach to save the tax.

But there are two things that make me a little perplexed about Montana's billboard.

First, if you're the type of person who has decided to drive all the way to Beach to save the tax, is appealing to you to "do the right thing" going to make a difference? Presumably, these people have already made a conscious decision to evade the cigarette tax — why would appealing to their sense of morality suddenly change their mind? My guess is it wouldn't. A more sinister "We're watching you and you could face six months in jail if caught evading taxes" type of billboard would have more effect.

Second, the billboard appeals to Montanans to pay the cigarette tax, but it doesn't tell you how to do this. Numerous Google searches (e.g. Montana cigarette tax, Montana cigarette tax North Dakota) don't seem to turn up any easy-to-follow instructions on how an ethical person could actually pay the tax if they so desired. The website for Montana's department of revenue also doesn't seem to have any easy-to-follow instructions on how to pay the tax. If you are going to encourage people to pay the tax, you should give them a clear idea on how to actually do it.