Tax Increase Ups the Ante for Smoking

Quick cash goes up in smoke

Last night I was listening to my neighbor complain about having just paid $7 for a pack of cigarettes. Weary as I am of picking her cigarette butts out of my yard, I am nothing if not a helpful neighbor. So I suggested she could either get a quick payday loan or slap on one of those nicotine patches. She’s considering a loan.

Tax increases cause many smokers to quit

According to a recent article in The Washington Post, all across the country, smokers are burning up telephone “quit” lines and enrolling in stop-smoking programs. Despite the ready availability of low cost loans to finance smoking habits, the latest boost in federal excise tax on a pack of cigarettes — from 39 cents to $1.01 — is driving people to wean themselves from their potentially deadly habits. Whenever the federal or state governments boost cigarette taxes, droves of smokers quit, or try to.

According to the Centers for Disease Control and Prevention, cigarette smoking and exposure to tobacco smoke caused 438,000 premature deaths in the United States each year from 1997 through 2001. Tobacco smoking cost the United States over $193 billion in 2004, including $97 billion in lost productivity and $96 billion in direct health care expenditures, or an average of $4,260 per adult smoker.

So what could be wrong with even greater tax hikes?

Given these social costs, it would seem that few tax increases could have higher upsides. So why not tack on another $5? According to an article by Michael Daly in the New York Daily News, a pack of cigarettes now costs about $10 in New York City, and the smoking rate among teens is 13.8 percent. In Kentucky where a pack sells for $4.80, the teen smoking rate is 28 percent.

If cigarettes were $15 a pack everywhere, we’d save millions of dollars and avoid all those slow, painful deaths from pulmonary disease, heart disease, stroke, aneurysm, and bladder, esophageal, laryngeal, lung, oral, throat, cervical, kidney, stomach, and pancreatic cancers. And for those who still opted to smoke, even at $15 a pack money lenders would be available to finance the habit. What could be the downside of a plan like that?

Genetic predispositions, personal freedoms, earning abilities . . .

For one thing, plenty of people believe they were born to smoke, and plenty more resent being told what to do with their bodies. There are also income-related inequities. Among Americans, smoking increases as income decreases, and lower income brackets are particularly hard hit by cigarette tax increases. According to a 2008 Gallup Poll, in the United States the annual income bracket with the highest percentage of smokers (34%) is $6,000 to $12,000. And that economic truth causes a lot of grumbling among lower-income smokers like my neighbor.

Balancing the equities Hershell Gordon Lewis-style

Like many other cost-of-living increases, increased cigarette taxes are felt acutely by the working poor. The inequities are not insurmountable, however.  Hershell Gordon Lewis proposed this solution in the South Florida Sun-Sentinel: “Let’s agree to cancel increases in cigarette taxes but in return, smokers will pledge never to sue Big Tobacco or anyone else when they get cancer or emphysema. And they’ll promise, in writing, not to ask Medicare or Medicaid or any insurance plan – not to mention all the non-smokers who support these programs with their taxes and insurance payments – to pay a single cent for their medical costs, hospice and ultimately their tombstone.”