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

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, availablehere, 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.


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