Plan to increase federal tobacco tax will save lives and cut health care costs


Posted On: 04/24/2013


President Obama has proposed action to help reduce tobacco addiction and save lives by increasing the federal cigarette tax by 94 cents per pack and similarly increasing taxes on other tobacco products.

The proposed tobacco tax increases would raise $78.1 billion over 10 years, nationally, to fund early childhood education initiatives, according to the Office of Management and Budget.

Research clearly shows that increasing the tobacco tax is one of the most effective ways to reduce smoking and other tobacco use, especially among kids. Even tobacco companies admit in their own documents that tobacco tax increases reduce smoking, which is why they vehemently oppose them. Every 10 percent increase in the price of cigarettes reduces youth smoking by six or seven percent and overall cigarette consumption by three to five percent.

The Congressional Budget Office, in a 2012 report, found that a 50-cent increase in the federal tax would raise substantial new revenue while prompting nearly 1.4 million adult smokers to quit by 2021. This would save tens of thousands of lives and reduce health care costs, including the Medicaid and Medicare programs. Based on the CBO’s statement, a 94-cent cigarette tax increase would prompt 2.6 million adult smokers to quit and save 18,000 lives by 2021, nationwide.

The Campaign for Tobacco-Free Kids estimates that the increase in the cigarette tax would:
  • Prevent 1.7 million kids from becoming addicted adult smokers. 
  • Prevent 626,000 premature deaths from these reductions in youth smoking alone.
  • Save $42 billion in future health care costs from these reductions in youth smoking.
The increased taxes on other tobacco products prevents the use of harmful and addictive products such as small cigars and smokeless tobacco.

The most recent increase in the federal tobacco tax, a 62-cent per pack increase enacted in 2009, resulted in:
  • an 8.3 percent decline in cigarette sales in 2009 – the largest drop since 1932; 
  • an immediate decline in youth smoking after the 2009 increase University of Illinois at Chicago; 
  • students who reported smoking in the past 30 days dropped between 9.7 percent and 13.3 percent (reducing the number of youth smokers by more than 220,000); and 
  • 12 months after the increase (April 2009 to March 2010), federal cigarette tax revenue increased by 129 percent (from $6.8 billion to $15.5 billion), even as cigarette sales declined. 
Oklahoma’s last tobacco tax increase in 2004 increased the amount by 80 cents per pack, to $1.03 per pack. This state tax is complicated because of the presence of sovereign Native American tribes with unique tax rules. Taxes on tribal cigarette sales range from 5.75 cents to 85.75 cents per pack, depending on the tribe’s compact with the state and whether it is close to states that have not raised tobacco taxes to Oklahoma’s level. Because of these complexities, a federal tax increase would be easier to levy.

Regardless of demographics or political affiliation, national and state polls consistently show strong public support for substantial increases in tobacco taxes by more than a two-to-one margin. A tobacco tax increase is a win-win-win for the country and for Oklahoma. It is a health win by reducing tobacco use and saving lives and a financial win that raises revenue for child education, as well as reducing tobacco-related health care costs.

This proposal is needed to reduce tobacco use, which kills approximately 6,000 Oklahomans annually, contributes to the 124,000 adults suffering from tobacco related diseases, and costs the state $2.8 billion in health care costs and lost productivity each year. While Oklahoma has been successful in reducing smoking, 26 percent of adults still smoke – still higher than the national average of 19 percent. Oklahoma ranks 47th among all states in tobacco use prevalence. In addition, one Oklahoma child becomes addicted to nicotine every 90 minutes.

Despite advertising restrictions, tobacco companies still spend $8.5 billion each year – nearly $1 million each hour – to market their deadly products, often in ways that appeal to kids.

We urge Congress to support this proposal, which would have as great an impact in reducing tobacco use among kids as any action the federal government has taken. It would be a giant step toward winning the fight against tobacco, the nation’s number one cause of preventable death.

For more information on how your hospital can become a tobacco-free culture, and not just a campus, contact Joy L. Leuthard at OHA, (405) 427-9537.

Sources:
  • The Campaign for Tobacco-Free Kids, Washington D.C.
  • Oklahoma State Department of Health, Center for the Advancement of Wellness
  • Oklahoma Policy Institute