Why Not Use the Sin Tax on Cigarettes to Save Lives?
When the price of cigarettes goes up, the smoking rate decreases. On the face of it, that sounds like good public policy—using market forces for a good cause. Young people in particular are price sensitive to tobacco costs. A good jolt to the tax on tobacco can cause a 6 or 7% drop in teen smoking rates, at least in the short term.
The federal government enacted a big tax increase on cigarettes on April 1. The tax went from 39 cents to $1.01 per pack. Major tobacco companies, anticipating an impending drop in business due to the tax increase, raised the price on cigarettes in March. Phillip Morris raised the price on their flagship brand, Marlboro, by 71 cents. According to the Campaign for Tobacco-Free Kids, the average nationwide price for a pack of cigarettes before local taxes is now $4.82. Of course, smokers in major markets pay much more than that. In New York City, the price for a pack of smokes has hit $9. Chicago isn’t far behind.
There are ways around paying that kind of money for a pack of coffin nails. A Native American reservation tucked away on Long Island annually sells a sufficient volume of cigs to supply every smoker in the Big Apple for several months. That’s 10 million cartons a year. Smuggling smokes from low-tax to high-tax states is on the rise, according to the Bureau of Alcohol, Tobacco and Firearms. This is a trend worth watching. Nine-dollar smokes is certain to have some unintended consequences, like funding future gang operations from the sale of illicit cigarettes.
Though the U.S. smoking rate has declined within the last ten years, from 28% in 2001 to 21% in 2008, according to the Gallup Poll, it remains stubbornly fixed at around 20% despite big state tax increases over the last four years. (NBC News, citing public health officials, announced a smoking rate just under 20% last November. Either way.)
These smokers, a group weighted toward lower income and less education, end up footing a huge retail tax bill compared to the rest of us. In New York City, state and local cigarette taxes comprise some $4.25 per pack. Add the federal tax to that, and you are looking at $5.26 in taxes for a single pack. A pack a day smoker would be on the hook for $1,920 in cigarette taxes per year at that tax level.
The Legacy of a Sin Tax
The cigarette tax is a classic sin tax. This old protestant-style discouragement and disparagement of smoking has come to serve a useful purpose as a deterrent to smoking. Cigarette taxes fund children’s health care at the federal level. State cigarette tax revenue distribution runs the gamut from the general fund, to education, to health care subsidies—but notably not for smokers. In fact, cigarette taxes fund just about everything but meaningful help for smokers.
Gasoline taxes build roads. But taxes on smokers—taxes which are deeply regressive, opportunistic, really—fund the services everybody else enjoys. Cigarette taxes are opportunistic because daily, long-term smokers are addicted to nicotine. This makes cigarette taxes fundamentally different from taxes on alcohol.
Cigarette taxes tax addicts.
That would be okay if some appreciable part of that tax were to be dedicated to helping smokers quit and to defray part of the public cost of their medical care.
Most people think smokers cannot quit—that they are a lost cause—and therefore we should just focus on discouraging the next generation from smoking.
That simply is not true.
Breakthroughs in Treatment
Huge breakthroughs have been made in pharmaceutical interventions to help smokers quit—and I am not talking about Nicorette. Drugs like bupropion (Zyban) and varenicline (Chantix) can make a huge difference in the success rate of cessation attempts. In one study with bupropion, 44%of the people who took the drug were able to quit. That is a nine-fold improvement over the baseline rate of 5%. But it takes more than drugs. The involvement of primary care physicians as coaches and monitors, participation in a formal smoking cessation programs and participation in online support groups like the Smoking Cessation support forum at About.com all help to boost the recovery rate of nicotine addicts.
Smoking-related illnesses cause an estimated 443,000 premature deaths each year. That is an astounding figure. Almost unbelievable. The addiction costs the economy $193 billion in health care expenses and lost time from work each year—all this according to the Centers for Disease Control and Prevention. The Center estimates that smoking-caused health costs total $10.28 per pack consumed in the U.S.
In face of this data, here is what cigarette taxes should support:
- Smoking cessation programs
- Medical interventions for smoking
- Medical care for conditions caused by smoking
- Anti-smoking campaigns
- Reimbursement of smoking-related state health care expenditures
The federal tax on cigarettes will raise about $30 billion over the next four years. State taxes will raise tens of billions more over the same period.
Why, then, don’t we act to assist those want to quit but can’t? Forty-six percent of smokers try to quit each year. All but 5% fail. If we were to use the available resources at our disposal to assist these attempts as bona fide medical interventions, wouldn’t we save billions and improve millions of lives in the doing?
Instead, many health plans don’t even cover smoking cessation. Many smokers don’t even know about improved drugs on the market—and uninsured smokers couldn’t afford them if they did. Meanwhile, the states pissed away most of the billions in tobacco lawsuit settlements they received to artificially lower taxes, giving almost nothing to programs to help addicts quit.
A Different Addiction
It all comes down to taxes, doesn’t it? Taxes and disenfranchisement. Smokers have never held any clout against the sin tax notion. They are poorer, less educated and less savvy than the mainstream. They used to be suckers, as the old song goes, “Cigarettes are the curse of the whole human race / a man is a monkey with one in his face…” Today they are pariahs.
So why shouldn’t a Republican-led citizenry have reduced its own tax burden over the last decade by heaping it at the foot of the despised smokers? Tim Pawlenty, the Republican governor of Minnesota and presumed future presidential wannabe, wants to borrow from future tobacco tax revenues to balance the state budget. He wants to tax cigarettes that have not even been smoked yet. He proposes this to preserve his No New Taxes cred. As if a sin tax wasn’t a tax.
All this because the suburban mainstream hates to pay taxes. I say, don’t reduce the taxes on tobacco by one dime. But stop the regressive targeting of a medically challenged and financially burdened population to cover the costs of living for a majority who simply don’t want to pay their fair share of the bill for the little luxuries of life—like schools, police, fire and public health. Their low-tax ethos seems more like addiction than philosophy of government.