North Carolina’s Cigarette Tax Increase Is A Small Step In The Right Direction But Kids and Taxpayers Will Miss Benefits of Greater Increase

Statement of Matthew L. Myers President, Campaign for Tobacco-Free Kids

Aug. 5 2005

Washington, DC — The North Carolina legislature’s long overdue decision to increase the state’s lowest-in-the-nation cigarette tax missed an opportunity to achieve significantly greater health and economic benefits on two counts. First, once fully implemented, the cigarette tax increase will bring the total cigarette tax to only 35 cents per pack-far below the national average of 90 cents per pack. Second, because the tax increase is split into two stages instead of a single increase (increasing by 25 cents on September 1, and by an additional 5 cents on July 1, 2006) the impact of the price increase will be less significant, and fewer North Carolinians will quit smoking and fewer lives and dollars will be saved. It would be a shame if in crafting this two-stage increase North Carolina’s leaders were influenced by the tobacco industry’s misleading arguments - which have stymied efforts to protect public health - that tobacco prevention measures would hurt the state’s economy.

North Carolina’s cigarette tax brings to 41 the number of states, along with the District of Columbia and Puerto Rico, that have increased their cigarette taxes since January 1, 2002. During that time, the average state cigarette tax has more than doubled from 43.4 cents to 92.3 cents a pack, raising billions in new state revenue while helping to significantly reduce smoking and save lives.

A cigarette tax increase is a win-win-win solution for North Carolina. It is a public health win that will reduce smoking and save lives, a fiscal win that will raise much-needed revenue and reduce smoking-caused health care costs, and a political win because cigarette taxes have the strong support of the public. North Carolina can expect the initial 25--cent per pack cigarette tax to prevent some 33,600 North Carolina kids alive today from becoming smokers, save 15,300 North Carolinians from smoking-caused deaths, produce more than $687.7 million in long-term health care savings, and raise more than $133.7 million in new revenue each year. The additional 5-cent increase will bring in another $20 million in new revenue.

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 every 10 percent increase in the price of cigarettes reduces youth smoking by about seven percent and overall cigarette consumption by about four percent. In recent years, every state that has significantly increased its cigarette tax has enjoyed significant increases in revenue even while reducing cigarette sales.

Along with recent cigarette tax increases in Kentucky, Virginia, Georgia and Tennessee, North Carolina’s cigarette tax increase represents important progress toward reducing the disproportionately high smoking rates and the terrible price paid in health, lives and money in tobacco-growing states. Like other states, the tobacco-growing states can further reduce smoking rates by supporting other proven tobacco prevention measures, including smoke-free workplaces and public places and well-funded programs to prevent kids from smoking and help smokers quit.

Tobacco use is the leading preventable cause of death in North Carolina, claiming more than 11,900 lives each year and costing the state $2.26 billion annually in health care bills, including $708 million in Medicaid payments alone. Government expenditures related to tobacco amount to a hidden tax of $556 each year on every North Carolina household. While North Carolina has made significant progress in reducing youth smoking, 24.8 percent of North Carolina high school students are still current smokers, and 23,700 more kids become regular smokers every year.

 

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