Depending on Cigarette Taxes

States such as Massachusetts may be too dependent on their smokers to plug budget shortfalls.

May 28, 2013

BOSTON – Forty-seven states have raised their respective cigarette excise taxes a combined 105 times since 2002, but only three states — California, Missouri and North Dakota — have avoided the temptation, according to the Campaign for Tobacco Free Kids. 

When it comes to boosting the price per pack with a higher excise tax rate, most states have little trouble moving forward. However, in Massachusetts, which is growing more dependent on its cigarette excise tax revenues — now approaching $1 billion a year — “the use of a sin tax to balance the books raises questions about who pays, where the money goes and how long it will last,” reports the Lowell Sun. 

"We have a budget shortfall, but it's not fair that smokers should be required to plug up the hole," Michael Siegel, a Boston University community sciences professor, told the newspaper.

In fact, national studies indicate that cigarette taxes are regressive, where smoking rates among the poor and less educated are much higher than those who have higher incomes and college degrees. And while those who study the science of tobacco addiction say the additional tax revenue should go toward programs target this group, the trend has proved otherwise.

Faced with budget gaps, Massachusetts governors and lawmakers have consistently diverted cigarette excise tax revenue away from anti-smoking programs, writes the newspaper, add that since 1994, funding for such programs has fallen by $48 million. Proponents of higher cigarette taxes, who believe the increased cost per pack will force smokers to quit, also say the revenue should be used for cessation programs. However, more of Massachusetts’ added tax revenue has gone directly into the state’s general fund. 

“Of the $815 million Massachusetts received from tobacco taxes and the big tobacco settlement this fiscal year, less than 1%, or $4.1 million, went to cessation programs,” writes the newspaper.

Dr. Denise Jolicoeur, program director for the Center for Tobacco Prevention and Control at UMass Medical School, says that low-income smokers may lack the resources to quit, which is also due in part to less funding for anti-smoking programs. 

"In Massachusetts, the Legislature took away much of the funding for cessation programs prior to 2001," Jolicoeur told the newspaper, adding, "The impact has been a reduction in access to face-to-face counseling for smokers and a decrease in the amount of tobacco treatment specialists being trained."

In essence, Massachusetts can’t afford to have smokers quit. Siegel told the newspaper that by using the taxes to pay for the general cost of government or special funding for transportation infrastructure the government will need smokers to keep smoking. “It really creates a perverse incentive where the government loses the motivation to take significant action to reduce cigarette consumption because we're going to lose transportation funding,” he said. 

Michael Widmer of the Massachusetts Taxpayers Foundation commented that it “could be dangerous” to count on a future of steady tobacco tax revenues.

"There are two major caveats to keep in mind,” he told the newspaper. “One, will we keep seeing a decline in smoking over the next decade? Two, is there a breaking point where the tax is so high that it leads to a sharp reduction in smoking, and the state loses revenue?”

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