How You Can Help Hold Big Tobacco Accountable
Nearly 20 years ago, a U.S. Federal District judge found that the major cigarette manufacturers violated civil racketeering laws for deliberately defrauding the public.
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Memo in Support of Tobacco Efforts
May 5, 2010
MEMORANDUM IN SUPPORT
Governor’s Tobacco Use Prevention Budget: A Public Health Jackpot for New York
Tobacco kills nearly 25,000 New Yorkers every year and cause over $8 billion dollars per year in health-care costs, of which $5.4 billion dollars is paid by Medicaid. If their price actually reflected the burden they impose on society in terms of health care and lost productivity due to illness and disability, a pack of cigarettes would cost $21.91.
The Executive budget continues New York’s successful battle against tobacco by raising cigarette taxes and partially restoring funding to New York’s world-class Tobacco Use Prevention and Control program.
Cigarette Tax Increase
The American Cancer Society strongly endorses Governor Paterson’s proposal to increase the cigarette tax by one dollar from $2.75 to $3.75 per pack because it will lead to reduced smoking, saving thousands of lives and billions of dollars. We estimate this increase will encourage more than 50,000 adult smokers to quit and prevent 100,000 children from ever becoming smokers.
Health Department surveys show that since 2000, when the cigarette excise tax was 56 cents, the rate of adult smoking has declined nearly 25 percent, from 21.6 percent to 16.8 percent. Moreover, the average number of cigarettes consumed per day by those who continue smoking has declined 25 percent, from 14.7 to 11 per day. A large part of the decline in taxed sales is due to the fact that far fewer New Yorkers are smoking, while those who continue to smoke are smoking less. The higher tax is not the only reason for this decline in consumption, but it is a major factor.
Despite the swift decline in smoking rates, New York today takes in nearly twice as much revenue from the cigarette tax today as it did in 2000.
Stop Tax Evasion
Clearly, tax evasion, especially that occurring through Indian reservations, is a serious problem. The excise tax is not paid on at least a third of the cigarettes smoked in New York. If it were, fewer would be used and state revenues would be even higher.
The American Cancer Society applauds Governor Paterson’s announcement that he will implement tax collection on tribal sales to non-Indians by the end of the year. Doing so will encourage at least 100,000 more smokers to quit and bring in at least half a billion dollars more in much needed revenue.
Doing both – increasing the tax by one dollar and collecting the tax due on cigarettes shipped to Indian reservations will deliver to New York a public health jackpot – as much as a billion dollars in increased revenue and a huge reduction in smoking among adults and, especially, kids.
Tax Other Tobacco Products
While it is raising the cigarette tax, the Legislature should also proportionately increase the tax on other tobacco products, especially snuff, chewing tobacco, and roll-your-own tobacco. Doing so will produce millions of dollars in additional revenue and prevent smokers from switching to cheaper alternative sources of nicotine. The tax on snuff should be raised by 35 cents to $1.31 per ounce or fraction thereof, and the tax on other tobacco products should be raised to 62 percent of wholesale price.
Also, the Legislature should close the loophole that allows so-called “little cigars” to be taxed at a much lower rate than cigarettes. “Little cigars” are in every respect cigarettes except they are wrapped in paper that contains tobacco and therefore are taxed at the much lower cigar rate. They look like cigarettes, come in packs of twenty just like cigarettes, contain cigarette tobacco and cause cancer just like cigarettes. Their design is nothing but a tax dodge that allows them to evade the cigarette tax, and as the price of cigarettes increases, they become an increasingly attractive low-price alternative, especially to teenagers. A bill before the Legislature, A.8052/S.5820, would tax little cigars at the same rate as cigarettes and it should be incorporated into the budget.
Support Tobacco Prevention Programs
The American Cancer Society also endorses the Governor’s proposal to begin restoring funding to the Department of Health’s Tobacco Use Prevention Program. He would raise the appropriation to $63.4 million from $55.2 million in the current fiscal year. Even with this restoration, the program’s budget is still 25% below what it was in the 2007-08 fiscal year.
This program has contributed significantly to the decline in teen and adult smoking rates since 2003, which are falling in New York much faster than they are in other states. New York’s adult smoking rate is 18 percent lower than the national average, and the teen-age smoking rate is 17 percent lower.
It is unfortunate that recent events have forced such large cuts to the program’s budget, which, by reducing tobacco-caused health care costs, actually saves the state money. For instance, smoking among Medicaid clients has declined by one-third since 2003, saving Medicaid more than $500 million this year.
The American Cancer Society strongly supports the Governor’s proposed Tobacco Program budget of $63.4 million.
For more information contact Russell Sciandra, 518-449-5438 ext 12
2/24/10
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