SMOKE TAX IS LIBERAL RECIPE FOR DISASTER.

Byline: CHRIS WEINKOPF

STATE Assembly Speaker Herb Wesson's plan to balance the budget by socking smokers with a gigantic tax on cigarettes is a recipe for fiscal, social and legal chaos.

That's why the Legislature's Republicans should consider voting for it.

Forty-one days have passed since the nominal deadline for a new budget, and Democrats and Republicans in Sacramento remain at loggerheads over how to erase a $23.6 billion deficit. Initially, Democrats had hoped to help make up the gap by ``temporarily'' (wink, wink) increasing the state's Vehicle License Fee - the odious tax that penalizes motorists for the crime of owning or leasing a car.

To their credit, Republicans refused to play along, and so last week, Democrats relented. Now, under Wesson's plan, they propose to balance the state's books by more than tripling the cigarette levy from 87 cents to a whopping $3 per pack, thereby driving the retail per-pack cost up to the $7 range.

So far, Republicans won't bite, maintaining that a state budget that's ballooned by more than 30 percent in the last four years should be easy enough to shrink. They reject any tax hike, let alone one a regressive tobacco tax, especially during tough economic times and an election year.

Those are all sound, principled objections. But if there were ever a tax hike to support, a $3 surcharge on cigarettes might be it - precisely because it's so outrageous, so unrealistic and so hopelessly destined for failure.

A little history: A decade ago, Canadian officials, like Sacramento Democrats, believed that placing exorbitant taxes on their citizens' addiction to smoking would be a good way to finance their own addiction to spending. In short order, the Canadian government raised the tax on cigarettes to $2 a pack, sending the price of the average carton up to about $45, two to three times what they were then selling for in the U.S.

Far from creating a government cash cow, the back-breaking tobacco taxes instead created a massive black market. Canadian tobacco companies saw their tax-free exports to the U.S. increase sevenfold as entrepreneurial Americans simply snuck the smokes back across the border, selling them to desperate Canadians for a tidy profit. Smugglers of all kinds flourished, bringing cigarettes in by kayak, trailer, any way they could.

In due time, one in three cigarettes sold in Canada was contraband, and American smokes, complete with the U.S. Surgeon General's warning, were available on the streets of any Canadian city. In 1995, recognizing that the high tax was spurring crime and sapping revenues, the Canadian government lowered its per-pack tax down to a more sensible average of $1.17.

In the U.S., New York City is the only place where tobacco taxes have hit the $3 mark, and with mixed results. Within a year of the city's higher taxes' taking effect, cigarette sales dropped by an astonishing 47 percent. That's not because nearly half of New York's smokers suddenly quit, but because many started getting their fix from retailers in New Jersey or Long Island.

It's easy to predict what would happen if California raised its cigarette tax that high: Small fortunes could be made by driving U-Hauls into Nevada, where cigarettes are taxed at a mere 35 cents per pack, then re-selling the goods with a healthy mark-up back in Wesson country.

Internet-savvy smokers would simply take their business to any number of tax-free, online smoke shops. Others could do their tobacco shopping on Indian reservations. And cigarettes, like sundry other kinds of contraband, would increasingly find their way up across the porous Mexican border.

A $3 surcharge would give the industrious and the desperate alike plenty of incentive to find ways around it.

If the Democrats who dominate Sacramento are adamant about raising taxes somewhere, tobacco might be the one place where Republicans could conscionably give in, because unlike the VLF, an excessive cigarette tax could be so easily avoided. As a result, it probably wouldn't put much more money in the government's hands, either.

Down the road, when Sacramento Democrats, like Canadian officials before them, realize the error of their ways, they, will most likely call for a repeal of the great 2002 cigarette tax that they created. Facing even larger deficits than they expected, they might then find themselves more open to doing what they refuse to do now: rein in spending.

In the meantime, by signing on to the tobacco portion of Wesson's compromise, Republicans would put an end to the budget stalemate and spare 22 million Californians from an unacceptable hike in the car tax.

All in all, not a bad deal - Machiavellian, to be sure, but maybe it's time for California's Republicans to join Democrats in their own game.