In the wake of economic hardship, many states are looking to raise taxes on cigarettes, a plan that supporters call a “win-win” solution.
Associated Press reported last week that 22 states are considering proposals by governors or legislators to increase cigarette taxes.
In Minnesota, Gov. Jesse Ventura has proposed a 29-cent tax increase on cigarettes, USA Today reported. “If you don’t want to pay it, don’t smoke,” Ventura said of the tax hike.
Indiana Gov. Frank O’Bannon (50 cents), Oregon Gov. John Kitzhaber (50 cents), Connecticut Gov. John Rowland (61 cents), Kansas Gov. Bill Graves (65 cents) and Nebraska Sen. Jim Jenson (50 cents) have all followed suit, making their own tax-increasing proposals.
“Statehouses across the country are recognizing that increasing cigarette excise taxes is good economics and good public health policy,” Donna Grande, co-director of the SmokeLess States National Tobacco Policy Initiative, said in an American Medical Association release.
The increased taxes not only boost revenue for states, but also aid in reducing smoking and, over time, decreasing the cost for treatment of smoking-related illnesses, CNN.com reported on Feb. 26.
For every 10 percent increase in cigarette taxes, demand for cigarettes is reduced by 4 percent, Frank Chaloupka, economics professor at University of Illinois-Chicago, told CNN.com. Half of that reduction, he said, comes from people who have quit smoking.
The AMA reported in a recent release that California’s 1999 50-cent cigarette-tax increase raised an additional $555 million—a 90 percent increase in new revenue. At the same time, cigarette consumption decreased by nearly 19 percent.
When New York increased its tax by 55 cents in 2000, it raised $352 million and decreased cigarette consumption by 24 percent.
Numerous studies have shown that increasing cigarette taxes is one of the most effective ways to reduce smoking among youth and adults, according to the Campaign for Tobacco-Free Kids.
A study released last year showed that “cigarette tax increases are especially effective at preventing kids from becoming regular, addicted smokers,” according to the Campaign’s Web site. “If cigarette prices were raised just 10 percent per pack nationwide, it would reduce the number of kids who become regular smokers by more than a million, saving them from addiction, disease and death.”
The top 10 states in cigarette taxes are New York at $1.50, Washington at $1.42, Alaska at $1.00, Hawaii at $1.00, Maine at $1.00, Rhode Island at $1.00, California at 87 cents, New Jersey at 80 cents, Wisconsin at 77 cents and Massachusetts at 76 cents.
Not surprisingly, many of the states with the lowest per-pack taxes on cigarettes are in the heart of tobacco country: Virginia, .025 cents; Kentucky, 3 cents; North Carolina, 5 cents; South Carolina, 7 cents; Wyoming, 12 cents; Georgia, 12 cents; Tennessee, 13 cents; Indiana, 15 cents; West Virginia, 17 cents; Alabama, 17 cents; and Missouri, 17 cents.
Matthew Myers, president of Campaign for Tobacco-Free Kids, said he wouldn’t be surprised to see more states increase their cigarette taxes.
“One of the reasons the tax is so popular is that 75 percent of the people (non-smokers) don’t pay it,” he told USA Today.
That is why tobacco companies have pledged to fight tax increases.
“It’s going to be a busy year for us, especially with the deficits,” John Singleton, public affairs director for R.J. Reynolds Tobacco, told USA Today. “These taxes also disproportionately affect low- and moderate-income people.”
According to CNN.com, Singleton pointed to a recent study which determined that about 58 percent of taxes paid on cigarettes fall on people earning less than $35,000 per year.
Brendan McCormick, spokesman for Phillip Morris USA, agreed, saying, “We don’t think it’s fair to single out smokers to pay for things that will benefit everyone.”
Jodi Mathews is BCE’s communications director.