States Look to Tobacco Tax Hikes to Cure Budget Woes
The Wall Street Journal today examines how more states are looking to increase their cigarette taxes in order to balance budget shortfalls, a tactic that pleases health economists and anti-smoking groups, "who say that price increases are the most effective way to discourage smoking." Over the objections of the tobacco industry, governors and legislators in at least 23 states have proposed a cigarette tax hike, ranging from 10 cents to 75 cents a pack. According to Arturo Perez, a fiscal-policy specialist at the National Conference of State Legislatures, politicians are reluctant to raise income or sales taxes, leaving increases in excise taxes, of which cigarettes are the "obvious choice." Anti-smoking advocates say price increases are more effective at reducing smoking than measures such as health-education campaigns and warning labels. The Journal reports that excise taxes are regressive, meaning that they "fall more heavily" on lower-income people because the tax accounts for a greater percentage of their income. Stating that 58% of American households with adult smokers earn less than $35,000 a year, RJ Reynolds Executive Vice President Tommy Payne said that lawmakers in favor of higher cigarette taxes are playing the part of "politically correct Robin Hood in reverse. They're saying, 'Let's take from lower- and middle-income people'" to reduce the state deficit. But public health advocates say that lower-income people are more likely to benefit from a tax increase in terms of health because they are more likely to have to give up cigarettes or cut down on consumption (Fairclough, Wall Street Journal, 2/20).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.