According to the Institute of Medicine, the U.S. Surgeon General, and the World Health Organization, tobacco tax increases are a highly effective means of reducing tobacco use.[i], [ii], [iii] Increasing the price of tobacco products through significant state excise tax increases improves health outcomes by preventing smoking initiation, promoting smoking cessation, and reducing the prevalence and intensity of tobacco use by teens and adults.[iv], [v],[vi],[vii] In fact, tobacco companies have repeatedly admitted in their own corporate documents that tobacco taxes are a significant deterrent to youth consumption and an incentive to adult quitting and therefore pose a serious external threat to tobacco industry sales volumes and profits.[viii],[ix],[x],[xi]
When faced with mounting evidence that tobacco tax increases effectively reduce tobacco use, tobacco manufacturers will try to distract policymakers from the material facts by invoking dire warnings of reduced revenue due to increased illicit activity including widespread smuggling and other organized crime that they claim will result from increased taxes on cigarettes and other tobacco products.
The tobacco industry and its allies are being intellectually dishonest when they say tobacco tax increases will lead to reduced state revenues because of widespread cigarette smuggling or other black-market activity. Consider the facts: every state that has significantly increased its state cigarette tax has also boosted its state revenue, despite the beneficial reduction in smoking resulting from the tax increase, regardless of any related tax avoidance, tax evasion, or illicit activity.[xii]
[i] Centers for Disease Control and Prevention. The health consequences of smoking — 50 years of progress: a report of the Surgeon General. Atlanta (GA): US Department of Health and Human Services; 2014.
[ii] Institute of Medicine. Ending the tobacco problem: a blueprint for the nation. Washington (DC): The National Academies Press; 2007.
[iii] World Health Organization. WHO report on the global tobacco epidemic, 2008 — the MPOWER package. Geneva (CH): World Health Organization; 2008.
[iv] Centers for Disease Control and Prevention. The health consequences of smoking — 50 years of progress: a report of the Surgeon General. Atlanta (GA): US Department of Health and Human Services; 2014.
[v] Chaloupka FJ, Straif K, Leon ME; Working Group, International Agency for Research on Cancer. Effectiveness of tax and price policies in tobacco control. Tobacco Control 2011;20(3):235–8.
[vi] International Agency for Research on Cancer. Effectiveness of tax and price policies for tobacco control. IARC handbooks of cancer prevention, Volume 14. Geneva (CH): International Agency for Research on Cancer; 2011
[vii] Holmes CB, King BA, Babb SD. Stuck in neutral: stalled progress in statewide comprehensive smoke-free laws and cigarette excise taxes, United States, 2000–2014. Preventing Chronic Disease 2016;13:150409. DOI: http://dx.doi.org/10.5888/pcd13.150409. Accessed December 12, 2016.
[viii] Philip Morris document. General Comments on Smoking and Health. Appendix I in The Perspective of PM International on Smoking and Health Initiatives, March 29, 1985, Bates No. 2023268329/8348.
[ix] Ellen Merlo, Senior Vice President of Corporate Affairs, Philip Morris, 1994 draft speech to the Philip Morris USA Trade Council, January 11, 1994, Bates No. 2022811708/1755.
[x] R.J. Reynolds Executive D. S. Burrows. Estimated Change in Industry Trend Following Federal Excise Tax Increase. September 20, 1982, Bates No. 501988846/8849.
[xi] Philip Morris Executive Claude Schwab. Cigarette Attributes and Quitting. March 4, 1993, Bates No. 2045447810.
[xii] Campaign for Tobacco-Free Kids. Raising State Cigarette Taxes Always Increases State Revenues (and Always Reduces Smoking). Updated January 19, 2021Available at: http://www.tobaccofreekids.org/research/factsheets/pdf/0098.pdf.
