B.C. cruise tax would hurt Washington and Alaska

When one jurisdiction raises its consumption taxes, it's usually good for the neighbouring jurisdiction. This is common sense — if the cigarette tax is almost four times higher in Montana than neighbouring North Dakota, for example, Montanans will drive to North Dakota to save money on cigarettes. Montana businesses lose cigarette revenue and the government loses tax revenue, while North Dakota gains.

But a potential tax on cruise ship passengers visiting Victoria (hat tip to Andrea Craig), as advocated by consultant and UVic lecturer Brian Scarfe, could actually be a bad thing for neighbouring jurisdictions.

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.