Tobacco Taxes: Win-Win-Win for Cash-Strapped States
By increasing cigarette taxes by $1 per pack, the states could raise more than $9 billion in new annual revenue to help close severe budget shortfalls, while also reducing smoking and saving lives, according to a new report released today by a coalition of public health organizations.
A national poll released along with the report finds that 67 percent of voters support a $1 tobacco tax increase. The poll also found that voters far prefer higher tobacco taxes to other options, such as other tax increases or budget cuts, for addressing state budget deficits.
The report details the revenue and health benefits to each state of increasing its cigarette tax by $1 per pack. If every state and Washington, D.C., did so, they would:
- Raise $9.1 billion in new annual revenue;
- Prevent more than 2.3 million kids from becoming smokers;
- Prompt more than 1.2 million adult smokers to quit;
- Prevent more than 1 million premature, smoking-caused deaths; and
- Save $52.8 billion in health care costs.
The report, Tobacco Taxes: A Win-Win-Win for Cash-Strapped States, was released by the Campaign for Tobacco-Free Kids, American Cancer Society Cancer Action Network, American Heart Association, American Lung Association and Robert Wood Johnson Foundation. The report was released as states are grappling with unprecedented budget shortfalls and facing tough choices to raise revenue and/or cut essential services.
“This report shows that raising tobacco taxes is truly a win-win-win for the states. It is a budget win that will help protect vital programs like health care and education, a health win that will prevent kids from smoking and save lives, and a political win with the voters,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids.
According to the national poll released with the report:
- By a 67 percent to 31 percent margin, voters favor a $1 per pack increase in the state tobacco tax, with 53 percent saying they “strongly” support the tobacco tax increase. This support crosses political lines, with a majority of Democrats (70 percent), Republicans (68 percent) and Independents (64 percent) favoring the increase.
- Voters far prefer raising the state tobacco tax to other options for addressing state budget deficits. While 60 percent supported increasing the tobacco tax for this purpose, more than 70 percent opposed every other option presented, including higher state income, gasoline and sales taxes and cuts to education, health care, transportation and law enforcement programs.
- By a margin of 59 percent to 35 percent, voters prefer a candidate for state office who supports the tobacco tax over one who opposes it. This preference is expressed by majorities of Democrats, Republicans and Independents.
"We have irrefutable evidence that raising the tobacco tax lowers smoking rates among adults and deters millions of children from picking up their first cigarette," said John R. Seffrin, Ph.D., CEO, American Cancer Society Cancer Action Network. "An increase in tobacco tax rates is not only sound public health policy but a smart and predictable way to help boost the economy and generate long-term health savings for states facing deepening budget deficits."
“When it comes to saving lives and injecting new revenue in depleted state coffers, we should not hesitate to support measures that will accomplish both,” said Nancy Brown, CEO of the American Heart Association. “Raising tobacco taxes will protect children and adults from tobacco use, reduce health care costs and revitalize critical health and education programs that too often fall victim to state budget cuts.”
“During these tough economic times, cigarette tax increases are both popular among voters and can significantly reduce long-term smoking-related health care costs,” said Charles D. Connor, American Lung Association president and CEO. “Spending some of the revenue on maintaining or increasing funding for tobacco prevention and cessation programs makes cigarette tax increases even more effective.”
The scientific evidence is clear that increasing cigarette prices is one of the most effective ways to reduce smoking, especially among youth. The report’s projections are based on research findings that every 10 percent increase in cigarette prices reduces youth smoking rates by about 6.5 percent, adult smoking rates by two percent, and total cigarette consumption by four percent.
According to the report, states can achieve even greater financial and health benefits if they also increase tax rates on other tobacco products, such as smokeless tobacco and cigars, and dedicate some of their tobacco tax revenues to fund programs to prevent kids from smoking and help smokers quit.
The current average state cigarette tax is $1.34 per pack, with rates ranging from a low of seven cents in South Carolina to a high of $3.46 in Rhode Island.
Tobacco use is the leading preventable cause of death in the United States, killing more than 400,000 people and costing $96 billion a year in health care costs. Every day, another 1,000 kids become regular smokers—one-third of them will die prematurely as a result.
The national survey of 847 registered voters was conducted from January 20-24, 2010, by International Communications Research and has a margin of error of plus or minus 3.4 percentage points.