Op-Ed: On Cigarette Tax Hike, Industry Blows Smoke
From the Commercial Appeal: Op-Ed: On Cigarette Tax Hike, Industry Blows Smoke
Tennessee Gov. Phil Bredesen’s proposed 40-cent cigarette tax hike for education appears to be in trouble in the legislature, where it is stalled in the Senate Finance Committee. Arguments against the tax hike, which would raise a projected $219 million, have been based largely on challenges to whether additional taxes are needed to sufficiently fund education in the state’s elementary and secondary schools, colleges and universities.
But we urge Tennesseans also to consider the benefits of a cigarette tax hike on health and the economy. Raising the price of cigarettes is a proven and effective method of preventing and reducing youth smoking. Children are more likely to never start, to quit or to cut back on smoking in response to higher cigarette prices.
The Campaign for Tobacco Free Kids estimates that a 50-cent-per-pack cigarette tax increase in Tennessee — just 10 cents more than Bredesen has proposed — would result in $232.6 million in revenue, 27,500 fewer adults smoking, 40,100 fewer children taking up smoking and 12,800 children saved from early death. Additionally, that hypothetical 50-cent tax increase would yield $16.6 million in savings over five years in health care costs related to cardiovascular disease, $12.2 million saved over five years because of improvements in pregnancy and birth outcomes, and $963 million in savings in long-term health care costs.
The tobacco industry has very skillfully created several subterfuges to steer voters away from these facts. One strategy has been to claim that cigarette taxes disproportionately affect the poor, who have the highest smoking rates. The evidence, in fact, points to the contrary; lower-income smokers benefit most from tobacco tax increases because they are most likely to quit or cut back as a result of increases in cigarette prices. Increased tobacco prices also reduce smoking initiation and consumption among youths, which carries long-term health and economic benefit for individuals and the society. The net result is a shift of the overall tobacco-tax burden toward high-income smokers who are less likely to be affected by increases in cigarette prices.
Another favorite anti-tax argument of the tobacco industry is that raising cigarette taxes leads to lost revenue for governments as consumption declines. This argument correctly acknowledges that cigarette taxes reduce consumption, but is fallacious in terms of the effect of tax increases on revenues. Even very substantial cigarette tax increases will both reduce consumption and increase tax revenues. This is partly because the proportionate reduction in demand does not match the proportionate size of the tax increase, since addicted consumers respond relatively slowly to price rises. Furthermore, some of the money saved by quitters will be spent on other goods, which are also taxed. Historically, raising tobacco taxes, no matter how large the increase, has never led to a decrease in cigarette tax revenues.
A cigarette tax hike could further improve the health of Tennesseans by channeling part of the added revenue to effective tobacco prevention and cessation programs. Such programs would especially benefit lower-income citizens who often do not have access to such services.
Investing part of these revenues into novel community-focused prevention and cessation research can further reduce the burden of tobacco use in Tennessee, which currently kills 10,000 of our citizens each year.
At 20 cents per pack, Tennessee’s cigarette tax is the nation’s third lowest. Although the potential benefits of a cigarette tax increase on the quality of our educational system may be compelling, we urge that Tennesseans also consider the proven health benefits that result from raising tobacco taxes.
Dr. Wasim Maziak and Dr. Kenneth D. Ward are associate professors in the Department of Health and Sport Sciences and the Center for Community Health at the University of Memphis.
