States Look to Boost Cigarette, Alcohol Taxes

Faced with "massive" budget deficits, many states are "grappling with an uncomfortable choice" of cutting programs or raising taxes on items such as cigarettes and alcohol, MPR's "Marketplace" reports. John Barrett, research economist at the Boston-based Beacon Hill Institute for Public Policy Research at Suffolk University, said that such "sin taxes" provide an easy way for lawmakers to fill budget gaps. Cigarettes and alcohol are "easy target[s]," Barrett said, adding, "People feel in general that people who smoke or drink cause more health problems and should bear a larger brunt of the burden." Currently, 24 states have introduced legislation that would raise state cigarette taxes, and a few states have proposed increasing alcohol taxes, according to Lee Dixon of the National Conference of State Legislatures. Massachusetts has proposed increasing the cigarette tax by as much as a $1 per pack, a levy that is "justified," state Ways and Means Committee Chair Sen. Mark Montigny (D) said. "Those of us who are proponents will say it is merely a down payment, because ... we see the effect of cigarette smoking. We spend well over $1 billion in public health money on smoking-related diseases," Montigny said. He noted that the state's cigarette tax has helped provide health insurance for 200,000 low-income children and a drug benefit for seniors, two programs "now threatened by the state's budget shortfall." However, Barrett expressed doubt that such tax increases would provide much help for states' fiscal problems. He said that although states may see a rise in revenue "in the very short term," in the long term, smokers will avoid the higher taxes by buying cigarettes through the Internet or purchasing cigarettes in a neighboring state with lower taxes. Still, officials say that one potential "healthy outcome" of higher tobacco taxes is getting children, who are the "most price-sensitive smokers," to quit (Palmer, "Marketplace," MPR, 4/4).

In other tobacco news, New York state's cigarette tax increased 39 cents yesterday to $1.50 a pack, pushing the price of a carton of standard brand cigarettes to $51 in some areas, the New York Post reports. The total tax on cigarettes in New York is now triple what it was in 2000, making it the highest cigarette tax in the nation. The price for a single pack of cigarettes is now more than $5. Dr. Thomas Frieden, New York City's health commissioner, is pushing to increase the city's tax even higher. "Now the state should pass Mayor [Mike] Bloomberg's (R) proposed $1.42 [per pack] increase," Frieden said. The proposed increase in the city's excise tax would "save more lives than any other single health intervention," he added (Gorta/Garvey, New York Post, 4/4).