Get the Facts

Why raise tobacco taxes? Here are a few frequently asked questions.

Do cigarette tax increases reduce youth smoking?

Studies, and experience in state after state, show that higher cigarette taxes are one of the most effective ways to reduce smoking among both youth and adults. Every 10 percent increase in the price of cigarettes reduces youth smoking by about seven percent and overall cigarette consumption by about four percent.

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What will happen to cigarette tax revenue in our state if the tax is increased?

Every state that has ever increased its cigarette tax rate has received more revenue than it would have obtained absent the rate increase. In fact, unless the state made overly optimistic revenue projections, every state that has increased its cigarette tax by a significant amount has enjoyed a substantial increase in revenue, despite ongoing and tax-specific smoking declines and any ongoing or increased tax evasion. Put simply, the increased new revenue the state receives on each pack sold in the state after a cigarette tax rate increase always significantly outweighs the revenue losses from the decline in total pack sales caused by the rate increase, including consumption declines prompted by the tax increase and any related tax avoidance, black market sales or smuggling.

There are very good models and formulas available for projecting state revenues from proposed cigarette tax increases that take full account of possible increases in tax evasion and smuggling. Despite being fiscally conservative, these models show that states will still enjoy substantial additional new revenues from significant cigarette tax increases. States that use these conservative models can be assured that there will be no "lower-than-expected" problems with future state cigarette tax revenues following the increase.

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What about the reliability of future state tobacco tax revenue?

The higher revenue levels obtained by cigarette tax increases will decline over time as smoking rates continue to go down, but the revenue changes will be gradual and predictable. There will be no surprises and the state can easily adapt— and the state will be enjoying significantly higher revenues each year than it would have received absent the cigarette tax rate increase.

State cigarette and overall tobacco tax revenues are much more predictable and stable than state income tax or corporate tax revenues, which can decline sharply during recessionary periods.

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What support is there for tobacco taxes?

Every single state that has significantly increased its state cigarette tax rate has enjoyed substantial increases in state revenue; despite the consumption declines prompted by the tax increase and any related tax avoidance, black market sales or smuggling. Smuggling and other tax evasion only reduce the total amount of net new additional revenues the states receive from cigarette tax increases; they do not come close to eliminating revenue gains or making tax increases unproductive.

Strong majorities of voters support tobacco tax increases; and they are more popular among voters than other tax increases and more popular than spending cuts.

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