Minnesota's Tobacco Tax Increase is a Victory for Kids and Taxpayers

Statement of William V. Corr, Executive Director, Campaign for Tobacco-Free Kids

Jul. 14 2005

Washington, DC — Minnesota's leaders have taken an important step toward protecting the state's kids and taxpayers from the devastating toll of tobacco by increasing the taxes and fees the state imposes on cigarettes by 75 cents, to $1.23 per pack, and doubling the excise tax on other tobacco products. This tobacco tax increase is a win-win-win solution for Minnesota - a health win that will reduce tobacco use and save lives, a fiscal win that will raise much-need revenue to fund vital health programs, and a political win that is popular with the voters. We applaud the legislators who championed this initiative to protect the health and pocketbooks of Minnesotans and Governor Tim Pawlenty for his support. We also congratulate the many organizations that pushed this measure for their extraordinary and tireless efforts in improving the health of Minnesota's citizens.

Minnesota can expect a 75-cent per pack increase in the price of cigarettes to prevent some 54,700 kids alive today from becoming smokers, save 24,400 Minnesotans from smoking-caused deaths, produce $1.1 billion in long-term health care savings, and raise roughly $174 million a year in new revenue.

While the tobacco tax increase is a major step forward, Minnesota can further reduce tobacco use - and realize additional health and financial benefits - by restoring funding for the state's tobacco prevention program to the minimum amount recommended by the Centers for Disease Control and Prevention (CDC). Despite the program's dramatic success in reducing smoking rates, the Governor and Legislature in 2003 eliminated the endowment created to fund tobacco prevention programs like Target Market - a youth prevention program that was considered a national model.

Minnesota brings to 40, along with the District of Columbia and Puerto Rico, the number of states that have increased cigarette taxes since January 1, 2002. During that time, the average state cigarette tax has more than doubled from 43.4 cents to 91.2 cents a pack, raising billions in new state revenue while helping to significantly reduce smoking and save lives.

The evidence is clear that increasing the price of cigarettes is one of the most effective ways to reduce smoking, especially among children and pregnant women. Studies show that every 10 percent increase in the price of cigarettes reduces youth smoking by seven percent and overall cigarette consumption by three to five percent. Preliminary evidence confirms that every state that has significantly increased its cigarette tax in recent years has enjoyed substantial increases in revenue, even while reducing cigarette sales.

Tobacco use is the leading preventable cause of death in Minnesota, claiming more than 5,500 lives each year and costing the state $1.9 billion annually in health care bills, including $428 million in Medicaid payments alone. Government expenditures related to tobacco amount to a hidden tax of $591 each year on every Minnesota household. In addition, 28.9 percent of Minnesota high school students currently smoke, and 14,100 more kids become regular smokers every year.

 

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