NCPA - National Center for Policy Analysis


July 17, 2006

Using so-called sin taxes to change consumer behavior is often controversial.  Not surprisingly, tobacco companies and smokers don't like them, while many health organizations do, says the Cleveland Plain Dealer.

Among the reasons for hiking Ohio's sin taxes on tobacco:

  • The American Cancer Society of Ohio and other anti-smoking groups argue that when cigarette taxes go up, smoking goes down.
  • Fewer smokers mean fewer tax dollars spent on health care.
  • And for politicians, cigarette taxes are a no-brainer: It's easier to pass a tax increase that doesn't affect most voters' pocketbooks; only 29 percent of Cuyahoga County, Ohio, residents smoke.

But there is a case against raising taxes on tobacco, says the Plain Dealer:

  • Tobacco giant Philip Morris and smokers' rights advocates say states ultimately lose money because smokers stop buying cigarettes at local stores; instead they buy them over the Internet or travel to nearby states with lower taxes.
  • Cigarette taxes are unfair because they take a larger chunk out of a poor smoker's budget than a wealthy smoker's; the proposed tax would cost a two-pack-a-day smoker $236 a year.
  • The Coalition for a Healthier Ohio says the state's annual smoking-caused Medicaid costs are $1.1 billion; Ohio taxpayers chip in $458 million and federal taxpayers (including Ohioans) pour in an additional $655 million.
  • The true cost of a pack of cigarettes in the United States is really about $40, according to a 2004 Duke University study; that's based on lifetime costs for a 24-year-old smoker over 60 years (it includes the cost of cigarettes, taxes, life and property insurance, medical care and lost earnings because of smoking-related disabilities).
  • The Duke study said smokers pay about $33 of the cost, their families pick up $5.44 and society chips in with $1.44.

Source: Amanda Garrett and Mark Rollenhagen, "The virtues of sin taxes," Cleveland Plain Dealer, July 17, 2006; and Frank A. Sloan et al., "Smoking Costs: The Price of Smoking," Journal of the American Medical Association, Vol. 294 No. 2, July 13, 2005.

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