U.S. would reap billions from $1 cigarette tax hike

WASHINGTON Thu Feb 11, 2010 7:57am EST

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WASHINGTON (Reuters) - Adding a $1 per pack tax to cigarettes could raise more than $9 billion a year for states, health advocates said on Wednesday, and a poll released with the study shows Americans would support such a tax.

The poll, conducted by International Communications Research, found 60 percent of voters would support the tax to help struggling states and would prefer it over other tax increases or budget cuts.

"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," said John Seffrin, chief executive of the American Cancer Society Cancer Action Network.

"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," Seffrin said in a statement.

The report was released by the Cancer Action Network, the advocacy arm of the American Cancer Society, the Campaign for Tobacco-Free Kids, American Heart Association, American Lung Association and the Robert Wood Johnson Foundation.

All these non-profit groups have long supported taxing tobacco more as a way to discourage smoking.

The report, available here, projects the revenue that each state could earn by increasing cigarette taxes, based on research that shows a 10 percent cigarette tax increase reduces total consumption by 4 percent.

It projects that a $1 a pack cigarette tax would prompt 1.2 million adult smokers to quit.

"In 2007, Texas increased its cigarette tax by $1 per pack from 41 cents to $1.41 per pack," the report reads. The next year, cigarette tax revenues nearly tripled from $523 million to $1.5 billion, despite a 21 percent decline in sales.

Analysts agree that higher taxes prompt many to quit, although some smokers merely switch to cheaper brands. In October, cigarette makers Philip Morris America Inc and Reynolds American Inc blamed the economy and a new 62 cent per pack federal tax for declining sales.

Federal taxes now total $1.01. The Campaign for Tobacco-Free Kids says the average U.S. cost for a pack of cigarettes is $5.15.

VOTER SUPPORT

The groups also surveyed 847 registered voters and found 60 percent favor raising the tobacco tax to help state budgets while 38 percent were opposed..

The survey, with a margin of error of three points, found that 72 percent of voters opposed increases in state sales and 80 percent rejected higher gasoline taxes.

"Each year in the United States, smoking-caused disease results in $96 billion in health care costs, much of which is paid by taxpayers through higher insurance premiums and government-funded health programs such as Medicaid," the report argues

"Indeed, higher Medicaid costs are one of the reasons states are facing budget difficulties."

The average state cigarette tax is $1.34 per pack, ranging from 7 cents a pack in tobacco-growing South Carolina to $3.46 in Rhode Island.

"It is disheartening the report's authors are suggesting legislators position tax increases as a way to address health issues while the report clearly describes tax increases as a way to fix budgets and score political points with voters," Philip Morris USA said in a statement.

"The report neglects to mention the fact that cigarette tax increases rarely generate all of the revenue they are projected to raise -- creating more budget problems down the road."

(Editing by Cynthia Osterman)

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Comments (39)
pyradius wrote:
As much as I despise the Tobacco industry, I have to agree with the Phillip Morris USA statement, as much as it pains me to do so. Where do you draw the line? Why not tax fast food, or more accurately unhealthy food?

Feb 10, 2010 7:56pm EST  --  Report as abuse
ohiobarowner wrote:
Of course Seffrin has “irrefutable evidence”, his future funding depends on it.
I think the readers need to be educated on who the Robert Wood Johnson Foundation is. The ACS Action Network is their “advocacy arm”. Interpretation, they lobby for RWJF. The RWJF was created by the founder of Johnson and Johnson. As of their last annual report, RWJF owned 42,343,491 shares of JnJ stock. RWJF has give half a billion dollars in “grants” for tobacco-control/smoking bans. Now, who do you think has the market cornered on nicotine REPLACEMENT therapy products? JOHNSON & JOHNSON. The American Cancer Society, American Heart Association and American Lung Association split a $99,000,000 tobacco control grant. You see Tobacco-Free Kids everywhere? According to RWJF, THEY CREATED and FUNDED TFK. Their start-up grant was $84,000,000. So you see, all these big names all got money from the non-profit of J&J that owns J&J stock who profits from big pHARMa’s form of nicotine.
The only thing an increase in tax on cigarettes does is breed black market cigarette sales.
On the poll, let me see if I’ve got this right. 60% favor a tax increase on cigarettes. The smoking prevalence in Ohio is 20.8%. That means, “statistically”, 19.1% of the Ohio NON smokers DON’T FAVOR a tax increase? How funny. Puts a whole new twist on it, doesn’t it? The ACS wants us to think that polling 847 registered voters NATIONWIDE makes their poll statistically significant? Just like their claims of harm from SHS/ETS that aren’t statistically significant.

I think Seffrin and his non-profit had best look to themselves to get the ACS back to “finding a cure in our lifetime”, instead of the waste the ACS has. According to their 2008 Consolidated Division 990s, they spent $390,305,361 on salaries, pensions, benefits and payroll taxes while spending a mere $4,406,038 on research. They spent more than 4 TIMES the research amount attending conferences ($18,158,259).

Maybe they need to get out of the business of controlling people’s lives and behaviors and work on controlling their spending and image. They both need vast improvement

Feb 10, 2010 8:58pm EST  --  Report as abuse
virgilk wrote:
An argument against taxing the H out of the bonus checks the AIG execs received is that congress can not pass a tax against any single group! That being the case why is it we smokers allow ourselves to be singled out to pay for other peoples children’s health care?
What might be a great fantastic idea is taxing the H out of the Medical Industry to pay for the increased cost of medical care due to their malpractice! Yeper third leading cause of death is due to medical malpractice, over 200,000 American die every year while paying dearly for malpractice insurance of a failed self policed heath system!
Tax the profit of the pharmaceutical companies that is making a WINDFALL PROFIT from forcing smoking bans on private business and Private Clubs!
Tax the Non Profits such as the American Cancer Society that gets Federal Dollars and pays their CEO over a million dollars a year and consolidated directors over $500,000 a year! NON PROFIT MY DONKEY!

Feb 10, 2010 10:21pm EST  --  Report as abuse
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