Health industry professionals are speaking out in support of Gov. Sam Brownback’s proposal to increase the tobacco tax by $1.50 a pack as part of a plan to mitigate budget deficits.
They say an increase in cigarette taxes will not only bolster Kansas’ economy, it will also save up to $1 billion in long-term health care costs.
“It’s a health issue, it’s an economic issue – they’re really one in the same,” said Jeff Willett, vice president of programs at the Kansas Health Foundation. “If we want to get a handle on the economy of Kansas, reducing smoking is one way to do that.”
The $1.50-per-pack increase is projected to generate $71.9 million in revenue within the first year, according to a study performed by TobaccoNomics, a research group at the University of Illinois at Chicago that “conducts economic research to inform and shape tobacco control policies.”
Carolyn Gaughan, executive director of the Kansas Academy of Family Physicians, said the proposal will be invaluable in curbing the amount of young people who take up smoking.
“There’s growing evidence that youth and young adults are more responsive to price increases than older adults,” Gaughan said. “The literature is clear: The higher cigarette prices discourages youth smoking.”
About 20 percent of adult Kansans smoke, according to data from the Kansas Department of Health and Environment. About 13 percent of high school students in the state are active cigarette users, according to the department.
Willett said that every 10 percent increase in cigarette prices will result in a 5 percent reduction in adult consumption. That statistic mirrors findings in a study performed by the Center on Budget and Policy Priorities, a progressive Washington-based think tank.
“On the policy level, there’s so much that could be done that would push us all forward,” Gaughan said. “Those are the kind of changes we need to see to really help move the dial.”
Cigarettes, Gaughan said, not only are carcinogenic, they also can cause vascular diseases.
“As a health care provider, we certainly see the firsthand effect of tobacco-related diseases on our patients,” said Bruce Witt, director of governmental relations at Via Christi Health.
“Clearly, reducing use of tobacco is squarely within where we think we’re going as a health care industry. We definitely support the tax, for really the reasons of hoping to reduce tobacco use.”
One of the major criticisms of the proposal is that it is a regressive tax – one that puts more tax burden on lower-income socioeconomic groups.
The stance taken by Willett: Don’t blame the tax; blame the product.
“Part of the illustration here is that tobacco is regressive by nature,” Willett said. “The product use is concentrated among lower-income people in the United States who disproportionately experience the health effects of tobacco use, and we are all sharing the costs for that.”
Brownback originally proposed the tobacco tax increase, along with a 4 percent increase in the liquor tax, in his State of the State address in January. He said the tax increases would help to offset a projected $648 million budget shortfall for the upcoming fiscal year.
If the increase in the tobacco tax passes, it would make Kansas’ cigarette prices the 11th-highest in the nation. Its current rate, 79 cents, ranks 35th out of 50 states.
Missouri charges 17 cents per pack of cigarettes, the lowest in the nation.
Another concern of anti-tax advocates is that, if passed, the high tax rate would prompt cigarette smuggling from neighboring states with lower tax rates.
Willett said he thinks cross-border sales are “really not as big an issue as the industry would suggest.”
“Certainly there will be some smokers that cross the border,” he said. “Most smokers buy a pack a day – they’re not buying multiple cartons. It’s unlikely they’re going to go from Pratt, Kansas, certainly not to Oklahoma or Missouri to purchase a trunkload of cigarettes to avoid a tax.”
Jodi Radke, regional director of the Campaign for Tobacco-Free Kids, testified before the Senate Committee on Taxation on March 24 in support of the proposal. In her testimony, she said “the evidence shows that the state that raises its tobacco tax always does better than a neighboring state that does not.”
Two years ago, Minnesota raised its cigarette tax from $1.23 to $2.83 per pack, the seventh-highest in the country. In January, the state further increased taxes by 7 cents. The state has raised more than $204 million in revenue, while 54.6 million fewer packs have been sold, according to a study published by TobaccoNomics.
Radke, in her testimony, said “some smuggling does happen” but that it is important to remember “most cigarettes sold in the United States are sold by the single pack, not cartons.”
Minnesota state officials told the Minneapolis Star-Tribune in February that cigarette smuggling is a growing issue in the state.
The proposal will not be adopted at least until April 20, when the Legislature’s consensus revenue estimates are released. Willett said he is confident the proposal will proceed as planned.
“The Senate approved a budget that assumed there would be revenue,” Willett said. “There are revenue needs in that budget that weren’t far off from the revenue that would be generated through the alcohol and tobacco tax, if that’s any indication.”