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Congress Should Back President Obama’s Tobacco Tax Plan – It Will Protect Kids, Save Lives and Cut Health Care Costs

Statement of Susan M. Liss, Executive Director, Campaign for Tobacco-Free Kids
February 02, 2015

WASHINGTON, DC – The Campaign for Tobacco-Free Kids strongly supports President Obama’s proposal to increase the federal tobacco tax, which is a proven way to prevent kids from smoking, save lives and reduce tobacco-related health care costs.

In his FY 2016 budget released today, President Obama urged Congress to increase the federal cigarette tax by 94 cents per pack and also increase taxes on other tobacco products. The tobacco tax changes would raise $95.1 billion in new revenue over 10 years. The budget proposes to use these funds to pay for an extension of the Children’s Health Insurance program (CHIP) and fund early childhood education initiatives proposed by the President.

This proposal would do more to reduce tobacco use among kids than any other single action the federal government can take. It is also a fiscally responsible proposal that will help to reduce the huge financial burden that tobacco use imposes on governments, businesses and families. A new CDC study issued in December found that smoking costs our nation about $170 billion a year in health care spending – far more than previously thought. More than 60 percent of these costs are paid by taxpayers through government programs such as Medicare and Medicaid.

Congress should embrace this proposal enthusiastically. It will save lives and money. And it will help millions of kids live longer, healthier lives free of tobacco addiction.

The evidence is clear that increasing the tobacco tax is one of the most effective ways to reduce smoking and other tobacco use, especially among kids. Economic research shows that every 10 percent increase in the price of cigarettes reduces youth smoking by about seven percent and overall cigarette consumption by three to five percent. We estimate that a 94-cent increase in the federal cigarette tax would:

  • Prevent 1.2 million kids from becoming smokers

  • Prompt 2.6 million adult smokers to quit

  • Prevent 444,100 premature deaths as a result of these reductions in youth smoking

  • Save $51.9 billion in future health care costs

Numerous public health and economic authorities have found that increasing the tobacco tax is effective at both reducing smoking and raising revenue. Last year’s Surgeon General’s report reaffirmed that. “Raising prices on cigarettes is one of the most effective tobacco control interventions,” the report concludes. “The evidence is sufficient to conclude that increases in the prices of tobacco products, including those resulting from excise tax increases, prevent initiation of tobacco use, promote cessation, and reduce the prevalence and intensity of tobacco use among youth and adults.”
The highly respected Congressional Budget Office has also concluded that increasing the federal tobacco tax would raise substantial new revenue, prompt millions of smokers to quit, save lives and reduce health care costs.

Furthermore, national and state polls consistently show strong public support for substantial increases in tobacco taxes, with most polls showing voters favoring tobacco tax increases by more than a two-to-one margin. Polls have found that large majorities of Democrats, Republicans and Independents and voters from a broad range of demographic and ethnic groups all support tobacco tax increases – as do significant numbers of smokers.

In short, a significant tobacco tax increase is a win-win-win for the country – a health win that will reduce tobacco use and save lives, a financial win that will reduce health care costs and raise revenue to fund an important initiative, and a win among voters.

The budget proposal also includes a measure that would ensure “full coverage of preventive health and tobacco cessation services for adults in traditional Medicaid.” Tobacco cessation services have been proven to reduce smoking and are cost-effective. After Massachusetts implemented tobacco cessation coverage for all state Medicaid beneficiaries, smoking among the state’s Medicaid population declined by 26 percent and the state saved more than $3 for every $1 it spent to help beneficiaries quit smoking.

The need for Congress to act to increase tobacco taxes and expand cessation services is clear. While our nation has made tremendous progress in reducing smoking, tobacco use remains the number one cause of preventable death in our country. Smoking annually kills 480,000 Americans – causing one in every five deaths. Without urgent action, 5.6 million kids alive today will die prematurely from smoking-caused disease.

The President’s proposal represents exactly the kind of bold action needed to accelerate progress against tobacco and make the next generation tobacco-free.