Fill The State Budget Holes With Cigarettes

So here’s an idea: fix states’ budget woes by raising the price of cigarettes. A number of anti-smoking a advocacy groups have released a study suggesting this could work. According to The Fiscal Times:

By increasing cigarette taxes by $1 a pack, the states could raise revenue to help close severe budget shortfalls, while also reducing smoking and improving health, according to a report by a coalition of public health organizations.  A national poll released along with the report this week found that 67 percent of voters support a $1 tobacco tax increase, and prefer that tax to other revenue-raising options.

According to the Campaign for Tobacco-Free Kids, one of the organizations that released the report, estimated state tobacco tax revenues could total $17 billion in the current fiscal year, while the federal tobacco tax is projected to raise $13.2 billion. The organization also estimated that for every 10 percent increase in the price of cigarettes, youth smoking (under-18) drops by approximately 6.5 percent, smoking among pregnant women drops by a similar rate, and overall consumption declines by 3 to 5 percent.

Unsurprisingly, cigarette companies and advocacy groups don’t think this is a good idea. I, for one, don’t think the cigarette market would go bellyup with a one dollar increase, but I don’t smoke. Bill Phelps, a Phillip Morris USA spokesperson argues that an increase is a bad idea because it will just drive smokers to buy cigarettes from other states or illegally. It’s not a bad argument. In a perfect world there could be federal cigarette tax increase but I don’t see that happening. Tobacco dependent states like North Carolina are too dependent on the revenue from their tobacco industries, especially in a bad economy such as this. Still, one can dream.

–Daniel Strauss