Nov. 17 2006
Washington, DC — We applaud Governor Mitch Daniels for announcing an initiative today to increase Indiana’s low cigarette tax rate and fund proven programs to keep kids from smoking and help smokers quit. Governor Daniels’ farsighted proposal will dramatically improve Hoosiers’ health by combating the number one preventable cause of death and disease – tobacco. Governor Daniels has proposed critical, proven solutions that will reduce smoking, save lives and reduce health care costs for generations to come.
Governor Daniels’ proposal calls for a cigarette tax increase of at least 25 cents per pack while opening the door for legislators to determine a higher increase. We agree with Indiana public health and faith groups that legislators should raise the cigarette tax by one dollar per pack. A significant cigarette tax increase combined with full funding for tobacco prevention and cessation programs will deliver the maximum health and economic benefit for Hoosiers. These steps will prevent kids from starting to smoke, help smokers quit, save lives, and save taxpayers money by reducing smoking-caused health care costs.
Governor Daniels has proposed solutions that are proven to reduce smoking and save lives. Science and experience have shown that increasing the cigarette tax is one of the most effective ways to reduce smoking among both youth and adults, especially when some of the revenue is used to fund tobacco prevention and cessation programs. Indiana can expect a $1 per pack cigarette tax increase to prevent some 102,900 Indiana kids alive today from becoming smokers, save 45,600 Hoosiers from smoking-caused deaths, produce more than $2 billion in long-term health care savings, and raise more than $339 million in new revenue each year. The benefits will be even greater, and continue to increase over the long-term, if the new revenue is used to fund tobacco prevention and cessation programs.
Governor Daniels’ proposal calls for funding the state’s highly successful and innovative tobacco prevention programs, run by the Indiana Tobacco Prevention and Cessation Agency (ITPC), at the minimum amount recommended by the U.S. Centers for Disease Control and Prevention (CDC). Indiana has provided less than a third of that recommended funding amount in recent years following crippling budget cuts.
According to the 2005 Indiana Behavior Risk Factor Surveillance System survey released in May, an increasing number of Hoosiers are once again becoming addicted to tobacco. Indiana now has the second highest adult smoking rate in the country after Kentucky. This disappointing news is not surprising because funding for the ITPC program has been cut by 70 percent in recent years. The impact is not just measured in lives lost, but also in high health care costs that are hurting the Indiana economy by raising costs to employers.
There is a clear correlation between the level of funding for ITPC and Indiana’s progress in reducing adult smoking, as shown in this chart. The ITPC budget was cut by 66 percent, from $32.5 million in Fiscal Year 2003 to $10.8 million per year in Fiscal 2004 and subsequent years. Indiana now funds tobacco prevention at just 31 percent of the minimum amount of $34.8 million a year recommended by the CDC. In contrast, the tobacco companies have increased their marketing expenditures in Indiana to a record $475 million a year, amounting to 44 times what the state currently spends on programs to prevent kids from smoking and help smokers quit.
Before the budget cuts, ITPC was recognized nationally as one of the most effective state tobacco prevention programs and contributed to significant declines in smoking among both adults and youth in Indiana. Adult smoking rates in Indiana declined by more than 10 percent between 2002 and 2004. Smoking among Indiana high school students declined by 32.5 percent between 2000 and 2004. Even with the budget cuts, ITPC continues to do excellent work to prevent kids from smoking and help smokers quit throughout Indiana, and the increase in adult smoking likely would have been even greater without its efforts. ITPC’s success is grounded in extensive community partnerships in almost every county in the state. However, unless funding for ITPC is restored, the reversal of earlier progress will continue.
Tobacco use is the leading preventable cause of death in Indiana, claiming more than 9,800 lives each year and costing the state $2.1 billion annually in health care bills, including $487 million in Medicaid payments alone. Government expenditures related to tobacco amount to a hidden tax of $585 each year on every Indiana household. While Indiana has made significant progress in reducing youth smoking, 21.9 percent of Indiana high school students are still current smokers, and 10,200 more kids become regular smokers every year.
Indiana’s current cigarette tax of 55.5 cents per pack is well below the average state cigarette tax of $1 dollar per pack. Twenty-two states have cigarette tax rates of $1.00 or more and six states have cigarette tax rates of $2 or more. Nearby Chicago currently has the highest tax rate in the country at $3.66 in combined state, county, and city taxes. Indiana’s cigarette tax is far below most neighboring states. For example, Michigan’s cigarette tax is $2.00 per pack and Ohio’s is $1.25 per pack.
We applaud the leadership Governor Daniels has shown today with his initiative to reduce tobacco use and improve Hoosiers’ health. We look forward to the Governor and Legislature working together to approve a significant cigarette tax increase and full funding for tobacco prevention and cessation programs. In doing so, they can leave a legacy of improved health and reduced health care costs for generations to come.