Steve Klingaman

Steve Klingaman
Minneapolis, Minnesota,
January 01
Steve Klingaman is a nonprofit development consultant and nonfiction writer specializing in personal finance and public policy. His music reviews can be found at

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MAY 14, 2009 11:23AM

Why Not Use the Sin Tax on Cigarettes to Save Lives?

Rate: 16 Flag

   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 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.

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I have a better idea--let's put the sin tax sky high on booze, anything 3.2 or greater. I smoke and pay the tax. But I don't drink. But bar owners, convenience store owners, casual beer drinkers, etc. wouldn't go for it. Too bad. How many thousands are killed needlessly each year becaue of booze?
Know a link for the Long Island reservation? The upstate New York one I was using got much more expensive.
JG: You're bad!

It is the Poopatuck Indian Reservation on eastern Long Island.
Good point about the cigarette taxes targetting mostly poorer and less educated people. We should have a luxury tax on the expensive wines. Right now the liquor tax is a FLAT fee per gallon. It should be changed to a progressive tax. I'm sure those people spending $400 for a bottle of Cristal have no problem paying another $40 tax on top. If the cigarette tax is a tax on the poor and stupid (Apologies to JimGalt :D), then we should have a smilar wine tax on the rich and stupid.
This is excellent -- the best summation of the tobacco tax issue I've run across. Thanks for this post.
Let us leave smokers alone, as well as our other "vices."
The country was founded on tobacco wealth: America is Jamestown.
Of course it is not good for you; but so what?
It is a free country, and other vices can be far worse.
Thanks for breaking this down.

I smoke and am stupid. It might be a good idea to tax everyone fairly.

Not just pick out something you don't do and aim taxes at them... this is not aimed at Steve, but at most people, who simply don't want to pay taxes. But are more than happy to have others pay taxes for them.
This is really well said and presented.
I appreciate that you don't demonize smokers, and instead offer a logical approach towards what a "sin tax" could go towards.
I'm sort of surprised to see smoking portrayed as a societal ill mainly exemplified by the poor. (Not by you, but in general) That seems like a pretty narrow take, and one that, to me, puts some sort of moral judgement onto smoking and smokers. Poor people don't smoke because they're poor and sad and all they have is cigarettes to get them by.
It's probably obvious that I am a smoker. And I won't try to justify smoking to you or anyone else, because it's my choice and I am delighted to pay the taxes. It definitely makes me think about smoking when I get only a handful of change from a ten dollar bill.
I really love your take on the sin tax and your thoughtful analysis. And your compassion.
Rated x3
NeilPaul, you raise some interesting points, with which I do not necessarily disagree. First, as to the societal cost of smoking and number of smoking-related deaths, I use the Centers for Disease Control and Prevention figures. I would like to know more about their methodology. But I expect that whatever it is, they have a defensible case, even if they have a long tail on what constitutes a smoking related death and push the issue of lost work days farther than I would.

Second, I absolutely do not stigmatize smokers. From my own experience, I know how deeply addictive tobacco is.

Third, the fair treatment of smokers is my entire point. Sin taxes are not designed to be fair. They are a form of financial punishment-- and an opportunistic expression of monetary policy at that. My point is that to use a sin tax to reduce the tax burden of the majority is not ethical, especially when the tax is as high as is the cigarette tax.

Then there is a failure point to the progressive logic of using cigarette taxes to change behavior. What happens when a pack of cigarettes costs $20? A black market develops.

And since all that money is being collected, why shouldn't the benefits of a great deal of it accrue to those who are resolved to quit, or whose medical treatment is unfunded?

A sin tax is a dead idea that lives on because it is so expedient.

And don't be so quick to criticize the left. California has some of the lowest state tobacco taxes in the country.

I think if you research the taxation spread, you will see a great deal of "bullying nature" on the anti-tax right, precisely because it is so politically expedient to stick it to smokers. Combine that with the social policy wonks who applaud high taxes to discourage smoking and you have quite an alliance.

To the right and to the wonks I say, fund efforts to help smokers as the only ethically valid course of action, regardless of your motivation and regardless of whatever level of ultimate taxation the body politic comes to accept.
Well let's just tax everything. Start with condoms add 10 bucks a box tax that will cut down on sex or increase the birth rate which is needed to fund SS in 20 years. How about a big tax on TV, food, water, heat, gas, the list goes on. Why because it is a hidden tax. You get your paycheck and say wow I got a 10 dollar tax cut. But, what you don't notice is your monthly bills to just get by went up 30.

They always start with the most vulnerable but it will not be long before all sorts of taxes are added to everything. Sure nobody complains about taxing smokers, but just wait non smokers someone will find your vice.

Canada put a very large tax on cigarettes in the 90s in the hope of reducing smoking because the cost of healthcare, but it actually cost them more because most people really start access the healthcare system when they are over 60 and since those smokers are not dying off at 70 (which is the average age of smoke related deaths) Canada's healthcare cost are increasing because of less smokers.

Fact is the health risk of smoking and the cost of has been way over inflated for decades, partly because of PC politics, but the main reason is it way to increase rates on insurance and don't forget the taxes. It is not a good idea to smoke, but making smokers a whipping boy for all of societies ills is short of voodoo.
Great post. I blogged about the butt tax on a different site (sorry OS) back in April...I'll repost on OS. I'm a "healthy smoker" (actually saw that term in an article on MSN the other day). ha!
Taxing cigarette addicts under the claim that it will prevent smoking is the most cynical revenue method on the books. I'm hooked on cigarettes, and the government is hooked on the cigarette taxes.
I'm sorry, I didn't realize a Masters Degree was "uneducated." I guess those years I spent in college were just a big waste of time. If I'd have just stayed home, I'd now have thousands of extra dollars to put towards the taxes on my cigarettes. I also never realized I was poor! This house, those cars, all the clothes, the TVs and computers must belong to someone else. I really hope he never comes home.....I like it here.

You want to increase revenue for local, state, and federal services without having to dig deeper into your own pockets? How about we start taxing the single most under-taxed (and in almost all cases, un-taxed) segment of this country. One word.....Churches!
One last thing -- please stop trying to save me. I smoke. I like smoking. I don't want to quit. I promise, if get sick, I won't sue the tobacco companies. I promise never to decry the failure of government to warn me that what I was doing was dangerous. Just leave me alone while I go outside for a smoke.
The temptation is strong to spend such taxes on other things. Like schools. I've heard talk of doing that. It's critical that if one does tax these things, the tax money go to something that is acceptable to ramp down if the tax causes the phenomenon to decrease. One doesn't want to be caught telling people to smoke more because it helps kids get educated. Rather, one wants to say that the tax can go to things like those you mention, helping people break the addiction or helping insure them in their later years when they get the likely cancers or heart attacks or whatever. Then, as fewer people smoke, such programs will be funded less, but there will be fewer people needing them.
In Australia,a packet of Marlboro would cost US $14.38.
We are heavily taxed on tobacco and alcohol.
To be seen as showing concern for growing alcoholism in our
community,the industry invested a paltry sum of AUD $56.million
to aid rehabilitation.
I've had this view for years about helping people quit if they are to be taxed.
A friend quit smoking by using chantix. He had a moths supply left over and gave me the remainder of his script. I had cut down to two smokes a day when the script ran out. I couldn't afford an $80 doctors visit and the $140 per month prescription to re-up and was back to 2 packs a day in no time.
I've written my congressmen, but just got chain responses. The system sucks.
I really think this post is a crock.

Cigarette taxes do fund programs to help people quit. Where I used to live they offered several free materials to help quit smoking, paid for by this money. That's not all it goes for because it's such a huge chunk of change, but some of it does go for those programs / literature to help quit smoking.

It is a proven fact that as the cost of cigarettes increases, the amount of people smoking decreases. Studies done by the tobacco industry and private organizations consistently prove this. But since it's demand inelastic of course you are going to see less people quit compared to a price increase (because they are addicted.) Still, point stands - higher prices, lower #s of smokers.

Guess what else? Take this from a guy who used to work as a consultant for a large multinational tobacco firm: Tobacco companies LOVE cigarette taxes because every time a tax increases they can add their own little price hike in there, and the government takes the blame for "high prices due to tax." Sad but true.

The cigarette tax is NOT a classic sin tax and it is irresponsible to portray it as such: cigarettes are a serious public health issue. The public health argument pretty much takes it outside the realm of being of no real social consequence. There are social consequences to smoking along with personal consequences.

Anyway I think that you make some points but its just so obliviously biased towards the smokers that it's hurting your credibility in the eyes of anyone skeptical. (Like me.) (Ha ha.)
I am three days out. Have both Wellbutrin and Chantrix which cost me $132 and should not have with all the money in tobacco.
Wish me luck.
Nick K: The amount of money from cigarette taxes that goes to help people quit amounts to pennies, or less than pennies, on the dollar. That is a simple fact.

A slightly higher percentage of cigarette tax revenue goes into discouraging people from starting.

The fact that, as the cost of cigarettes increases, the rate of smoking decreases was my point exactly, as I stated in the first sentence of the post.

Excise taxes on cigarettes are a classic sin tax and predate their public health justification by decades.

The way I see it, I am not biased towards the smokers, I am biased toward helping smokers who want to quit, because I know that the addiction to nicotine is seemingly impossible to break without big-time intervention and help.

Postscript to Michael Ryland: If you enjoy smoking, hey, I get it. I still miss smoking. I would not presume to change your behavior. But studies show that nearly half of all smokers would like to quit if they could.

And to your comment on education level: I refer only to the overall demographic data in making the comment that the universe of smokers skews towards being less educated. Some well-educated people and some wealthy people smoke. Absolutely. I get it.
Thank you for an excellent post. I have smoked for more than three decades and have tried to stop numerous times. I am hoping that the new taxes will provide the incentive I need to try again and to succeed but nicotine addiction is a bear, I've heard cigarettes are tougher to kick than heroin.
I agree with those who say the government is hooked on the money it is bringing in from increased cigarette taxes and that if we all quit, they would be extremely upset at the fall in revenue. Pawlenty's idea is particularly hypocritical.
The idea that they are doing this for our well-being is a crock. Like another poster, I don't drink. Raising taxes on booze could help cut down on drunk driving accidents, which have already killed 4,785 people thi9s year. But people who consume alcohol aren't treated as pariahs the way somkers are
Mrsmax, thank you for your comment. I can't tell you how much bupropion can help. It's all about brain chemistry. Use it in combination with support from your doctor. My doctor made all the difference. But the interaction of a smoking cessation group is also a big help.

Don't go for it until you are really, really ready to quit. It is almost like you have to engineer a self-induced personality transplant. But with the drugs, after a couple of weeks....poof! You are on the other side. It is NOT impossible.

Best wishes to you and others who want to give it a shot.

Smoking is not the best thing to do, but frankly it has become the catch all for health standards in this country. Truth is if you smoke you run a 99.8% of not getting cancer. Plus, the statistics of cause from smoking related deaths are totally inflated. For example most people do not know that if you smoked more than 200 cigarettes in a life time and die of cancer, your death will be added to the smoker related illness column. Also, over 80% of those who die of cancer or heart problems linked to smoking will die within the normal range of mortality.

My biggest problem with the whole anti smoking movement is they lump all smokers together. Truth is those that abuse smoking (more than 10 per day) run the highest risk. Those that smoke less than 10 statistically have the same chance of getting cancer as a non smoker. As for second hand smoke that is PC voodoo science at its best. To date not one death had been linked to second hand smoke period, it is a computer model not real life statistics. The average restaurant worker who works an 8 hour shift with an average of 7 smokers per hour will ingest less than a half a cigarette. And that does not account for better ventilation and smoke eating technology now available to restaurants and bars which removes the amount of second hand smoke to almost nothing.

If you smoke it is a good idea to quit or cut down to below 1/2 pack per day. If you smoke more than a pack and drink (there is a big link between smoking and alcohol abuse) you may find yourself at 70 years old dying from cancer. Of course you will find yourself dying from something anyway. No one gets out alive.

The tax is just that a tax to fuel more government spending, it has nothing to do with the benefits to the society.
How about taxing obsessive compulsives for stressnig everyone else out, or taxing control freaks too?
I mean, it seems to me that we all have vices that make life harder, and we have fogotten this fact, that we are all imperfect, and what this really encourages is bullying.
I have a few questions here. What happens when there are no more smokers and the hundreds of millions of dollars that are collected every year to fund all these child health care agendas are no longer being funded by smokers? Where is all the money going to come from to keep them going? How come when there is a tax increase on cigarettes it only goes to kids and not into the general fund like they did to destroy Social Security, how much longer is that going to last? Being 46 I'm probably never get any of my money back. Since I pay this tax on top of all the rest of the taxes I feel like I'm not being represented here, only minors are. BTW, emphasima is no longer on the list of disabilities Social Security covers.
Regarding your first question, the loss of revenues caused by the declining number of smokers inevitably places pressure on states to jack up the rates in order to maintain the status quo.

A number of policy researchers have pointed to this dynamic to support their contention that cigarette taxes are a lousy way to fund government in general.
This is a well-written and well-argued post. I am a former smoker- started at 16, quit at 22. Started again at 33, quit at 38. Haven't smoked for 5 years. You make some excellent points and the money this would save on smoking related healthcare costs would be immense.
It's never been clear that smoking is a cost to society. Smokers tend to die younger, reducing pension and social security costs.

Second hand smoke may not have much of a health impact, but it is absoultely obnoxious. Even if it were definitively proved to have zero impact on non-smoker health, I doubt anyone would go back. I've lived in countries that allow smoking in restaurants and I remember my church group where smoking was allowed. I smelled like an ashtray after meetings. My eyes stung. It takes a lot of habituation to tolerate and now that non-smoking Americans aren't habituated, they wouldn't tolerate it.

Canada was a lovely case of the impact of too high taxes. As the tax on cigarettes went up, the number of cigarettes, including Export As (Canada's favorite brand) sold in Canada went down dramatically. The number of Export As sold in the US went up dramatically. This rise was seen only in towns bordering Canada. The number of Americans saying they smoked Export As did not rise much at all.

Alcohol is taxed in just about every state. Low tax states like NH take advantage of proximity to high tax states. New Hampshire has enormous state liquor stores on the highway right over the border from Taxachusetts.
I like Malinuska's point, that smokers die young. That was in a novel to help solve the Social Security problem to get rid of the elderly.