Enough of the puff: tax may cut smoking rates

By Will Dunham

WASHINGTON (Reuters) - A big hike in the federal tax on cigarettes taking effect on April 1 may prompt 1 million U.S. smokers to quit, according to public health experts.

Expansion of a popular public health insurance program for lower income children is being financed by an increase in the federal excise tax on a pack of cigarettes of about $1.01 per pack, up from the current 39 cents on a $4.35 pack.

Smoking kills about 440,000 Americans annually and costs the nation $193 billion in medical expenses and lost productivity, said Dr. Terry Pechacek of the U.S. Centers for Disease Control and Prevention's Office on Smoking and Health.

"There is almost unanimous agreement across the scientific community and policymakers that raising the price of cigarettes in whatever fashion has a consistent effect on reducing smoking rates, increasing the quit rate among adult smokers and preventing the initiation of regular smoking by children and young adults," Pechacek said in a telephone interview.

Danny McGoldrick, the Campaign for Tobacco-Free Kids advocacy group's vice president for research, said the formula is simple: as prices rise, fewer people buy cigarettes.

McGoldrick forecast the tax hike will persuade just over 1 million current smokers to quit and prevent 2 million children from starting. These changes will avert about 905,000 smoking-related deaths and save $44.5 billion in healthcare expenses over time, McGoldrick predicted.

President Barack Obama signed the expansion of the State Children's Health Insurance Program on February 4. President George W. Bush had twice vetoed the bill, which also raises federal taxes on cigars and other tobacco products.

The industry is unhappy. Higher prices will lead to at least a 10 percent decline in cigarette sales and could put 117,000 people out of work, said Thomas Briant, executive director of the National Association of Tobacco Outlets.

LOST JOBS

Briant, whose group represents the operators of 2,500 retail stores, tobacco wholesalers, cigarette manufacturers and others, decried "the single largest tax increase on a product in the history of the United States."

"There's going to be an immediate drop-off in sales because of that tax increase as of April 1," Briant said. "We expect the fall-out from that in terms of job losses to take about six to nine months from that date."

Retail store clerks and cashiers, truck drivers who deliver cigarettes, warehouse workers, sales representatives and others may lose jobs, Briant said.

U.S. smoking rates have been declining slowly for decades. The CDC's most recent data showed about 19.8 percent of U.S. adults -- 43.4 million people -- were smokers in 2007.

Smoking rates vary by state -- from a high of 28 percent in Kentucky to a low of 12 percent in Utah. Rates are often higher where state tobacco taxes are lower. The average state tax is $1.32 per pack, ranging from a low of 7 cents in South Carolina to a high of $2.75 in New York state.

State taxes have more than doubled in the past six years and more states and localities are banning smoking from public places like office buildings, restaurants and bars.