Key Findings: Cigarette Taxes

View the State Rankings for Cigarette Taxes.

The potential benefit of raising cigarette taxes is enormous for the health of citizens and for state coffers.
Higher taxes make cigarettes more expensive, keeping kids from starting to smoke and motivating adults to stop. Tax monies should be used to fund comprehensive tobacco-prevention programs and of state financial
woes, raising tobacco taxes can help plug budget holes.

Top Excise Tax Increases in 2002

       1. Massachusetts  +.75
       2. New Jersey  +.70
       3. Pennsylvania  +.69
       4. Oregon  +.68
       5. Connecticut  +.61
       6. Arizona  +.60
       7. Kansas  +.55
       8. Michigan  +.50
       9. Vermont  +.49
      10. Illinois  +.40
      10. Indiana  +.40

States that take positive action now to reduce smoking will see their health-related costs gradually decline as
prevention and cessation programs reduce tobacco use and tobacco-related disease. The Centers for Disease Control and Prevention estimates that each pack of cigarettes sold in the United States costs the country $7.18 in medical care costs and lost productivity.15

A major tax increase on tobacco products will rapidly and significantly reduce the number of children
who start smoking and encourage many adults to quit. For instance, economists believe that a 10 percent
increase in the price of cigarettes would reduce teenage smoking by 7 percent and 4% for adults.16Additionally, the CDC found that minority, younger and lower-income populations would be more likely
to reduce or quit smoking in response to a price increase.17

Cigarette Taxes: Bright Spots

Raising the cigarette excise tax has proven to be a winning solution for cash-strapped states. An historic
twenty-one states and the District of Columbia increased their cigarette excise tax as of January 1,
2002. Most importantly, eight states—Arizona, Connecticut, Maryland, Massachusetts, Michigan,
New Jersey, Oregon and Pennsylvania—and the District of Columbia have joined six others with a
tax of $1.00 or more per pack. Vermont will also join the club as of July 1, 2003.

Eight states—Arizona, Connecticut, Kansas, Indiana, Pennsylvania, Oregon, Ohio and Vermont—have more than doubled their tobacco tax this year.

Massachusetts now has the highest state cigarette tax in the nation—$1.51 per pack. New York City smokers are now paying the highest combined cigarette tax—$3.00 per pack—that includes a $1.50 state tax plus a $1.50 city tax. In addition, New Jersey raised the state tax on cigarettes to $1.50 per pack. This near doubling of the previous tax rate is expected to raise over $200 million for the state. The American Lung Association of Washington led an effort to bring together tobacco control advocates and other concerned health care organizations to draft and pass Initiative 773 for the November 2001 ballot. I-773 increased Washington’s cigarette tax by $0.60 per pack, to $1.425, the highest in the nation at the time, and provided money to increase the annual appropriation for funding the statewide tobacco prevention and control plan to $26.25 million per year.

Cigarette Taxes: Work to Do

This report finds that 17 states received an F in cigarette taxes. While a large number of states raised their cigarette taxes in 2002, states still have failed to set cigarette taxes at a high enough level to significantly
impact youth smoking. (View Appendix D: The Cigarette Excise Tax Chart.)

Cigarette Taxes: Looking Ahead

More and more states are realizing the positive benefits of raising the cigarette excise tax. The American Lung Association expects that half the states will have tobacco taxes of $1 or more by the end of 2003.

Cigarette Taxes: Policy Goals

The American Lung Association encourages the following
action:

• Enactment of significant increases in the excise
  tax on all tobacco products;
• Indexing tobacco taxes to ensure that tobacco
  taxes will, at a minimum, keep up with inflation;
  and
• Designating a portion of the tobacco tax revenue
  to cover tobacco education, prevention and cessation
  programs.

Key Findings continued...