WASHINGTON (Reuters) - Higher state taxes on smoking are producing sharp declines in tobacco consumption in the United States, just as Congress considers a huge federal cigarette tax hike, USA Today reported in its Friday editions.
The newspaper, conducting its own analysis of taxation and consumption figures, said the degree of decline in smoking appears to be tied directly to the size of the tax increase.
For example, cigarette sales fell 18 percent in North Carolina last year after the state tax was raised in two steps to 35 cents from a 5 cents, the newspaper said.
In Connecticut, per capita consumption of cigarettes has fallen off 37 percent since 2002 while state taxes have increased from 50 cents per pack to $1.51, according to the newspaper.
But in South Carolina, which has kept its lowest-in-the-nation cigarette tax at 7 cents since 1977, cigarette consumption has fallen only 5 percent since 2000, USA Today said.
The Senate last week approved a $35 billion tobacco tax increase as a way to pay for expanded government health care for children. Meanwhile, the House of Representatives has proposed its own plan to provide health care to children through higher tobacco taxes and cuts in payments to private insurers in the Medicare Advantage program for the elderly.
The House and Senate must reconcile their versions before sending a final bill to President George W. Bush after lawmakers return from a month-long August recess.
Bush has threatened to veto either version, which he and Republican allies have called a step toward nationalized health care.
Nationwide, the number of cigarettes smoked fell last year to 1,293 per capita from a peak of 2,095 per capita in 1976, USA Today said, citing an industry report titled, “The Tax Burden on Tobacco.”
The newspaper said research shows that health concerns, tax hikes and higher retail prices all have played a role in the decline. It noted a Congressional Budget Office estimate that smoking falls 2.5 percent to 5 percent for every 10 percent increase in the price of cigarettes.