SMOKING DECLINES AS TAXES INCREASE
August 10, 2007
As Congress weighs the biggest federal cigarette tax hike in history, a USA Today analysis finds that higher state taxes on smokers have produced sharp declines in smoking.
The amount of decline in smoking is directly tied to the size of the tax increase, the analysis shows:
- Cigarette sales fell 18 percent in North Carolina last year after the tax was raised in two steps to 35 cents from a nickel. The tobacco-growing state resisted higher cigarette taxes until 2005.
- Connecticut increased its tax to $1.51 from 50 cents per pack in 2002; since then, per capita consumption of cigarettes has fallen 37 percent.
- New Jersey raised its tax from 80 cents to $2.40 per pack in 2002; since then, smoking has declined 35 percent.
- California raised its cigarette tax to 87 cents per pack in 1999 but hasn't changed it since; smoking is down 18 percent since the tax increase.
- By comparison, South Carolina has kept its lowest-in-the-nation cigarette tax at 7 cents since 1977; cigarette consumption there has fallen 5 percent since 2000.
- The number of cigarettes smoked fell last year to 1,293 per capita from a peak of 2,095 per capita in 1976, according to "The Tax Burden on Tobacco," an annual industry report.
- Research shows that health concerns, tax hikes and higher retail prices all have played a role in the decline.
- Smoking decreases between 2.5 percent to 5 percent for every 10 percent increase in the price of cigarettes, according to the Congressional Budget Office.
Source: Dennis Couchon, "Smoking declines as taxes increase," USA Today, August 10, 2007.
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