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Pennsylvania Tobacco Tax Increase: WIN for health, WIN for the budget
November 12, 2015
FOR MORE INFORMATION, CONTACT:
Michelle Zimmerman
American Cancer Society Cancer Action Network
Phone: (888) 227-6446 Ext. 8601
E-mail: [email protected]
Pennsylvania Tobacco Tax Increase:
WIN for health, WIN for the budget
Harrisburg, PA (Nov. 12, 2015) – More than 9,000 Pennsylvania kids become daily smokers every year and one-third of them will die prematurely as a result. Pennsylvania leaders, struggling to end a budget impasse, can save lives and generate important new revenue with a significant increase of at least $1.00 – our coalition supports a $1.60-per-pack hike – in the state’s cigarette tax.
Also, Pennsylvania is the only state without a tax on other tobacco products such as smokeless tobacco and cigars. State legislators should establish a tax on such products equivalent to the tax on cigarettes to reduce all tobacco use and raise additional revenue for the commonwealth.
This solution is a triple-win: It’s a health win that will reduce tobacco use and save lives; a financial win that will generate revenue for the state; and a political win that is popular with voters. Good luck finding that combination on other issues!
Meanwhile, legislators need to know that the tobacco industry will often support small cigarette tax increases, which it can easily undermine so that people keep smoking. While the state might still generate some revenue, the health care costs – not to mention the personal toll – from tobacco use will continue to climb as people continue to use. Cigarette tax increases will only reduce use if they lead to a noticeable increase in the price of cigarettes. If the tax increase is small (for example, under $1.00), the tobacco industry can offset its effectiveness through discounting and promotional strategies that will ensure minimal, if any, effect on reducing tobacco use. Larger price increases will be more difficult for the tobacco industry to offset, leading to a decrease in tobacco use, particularly among kids, and a reduction in health care cost burdens.
Win #1: Increasing the tobacco tax will reduce smoking, especially among kids.
A $1.60-per-pack increase in Pennsylvania is projected to prevent more than 91,000 kids from becoming smokers; encourage more than 100,000 current adult smokers to quit; and save more than 55,000 Pennsylvania residents from premature, smoking-caused deaths.
Win #2: Increasing the tobacco tax will help the state’s budget.
Pennsylvania currently spends $6.4 billion each year on tobacco-related health-care costs. Higher tobacco taxes both raise revenue and reduce health-care costs. A $1.60 per-pack increase in Pennsylvania’s tobacco tax is projected to save more than $3.5 billion in future health-care costs while generating more than $400 million in new annual revenue. And the evidence is clear that state tobacco taxes are one of the most predictable sources of revenue that states receive.
Win #3: Increasing the tobacco tax is popular with voters.
Pennsylvanians strongly support increasing the state’s tobacco tax. According to a Public Opinion Strategies poll from November 2014, some 72 percent of voters – Republicans and Democrats alike – favor increasing the state’s tobacco tax.
Tobacco companies oppose significant tax hikes because they know the result will be fewer customers for their products. It’s no surprise, then, that tobacco companies spend billions of dollars each year to keep the price of tobacco products low with aggressive price discounting, coupons and offers such as multi-pack discounts. And because research shows that that youth are much more responsive to price changes than adults, discounting strategies are particularly harmful to kids. These strategies diminish the effect of a tax increase by minimizing the price change so consumers are not deterred from purchasing. In Pennsylvania, tobacco companies spend an estimated $470 million annually marketing their deadly products.
The only group that will benefit if there is no cigarette tax increase or just a small one is Big Tobacco. Legislators need to decide whose side they are on in this fight.
NOTE: Philadelphia passed a $2-per-pack increase in 2014. The General Assembly must reject anything that undermines the city’s effort and tries to repeal that increase.
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