Maryland Cigarette Tax Increase Delivers Victory for Kids and Taxpayers

Washington, D.C. — Maryland’s leaders have taken an historic step to protect the state’s kids and taxpayers from the devastating toll of tobacco use by increasing the state cigarette tax by $1 per pack. A higher cigarette tax is a win-win-win solution for Maryland – a health win that will reduce tobacco use and save lives, a financial win that will raise revenue to fund expanded access to health care, and a political win that polls show is popular with the voters. We applaud Governor Martin O’Malley for his leadership in proposing to increase the cigarette tax and the Legislature for enacting this life-saving proposal.

The evidence is clear that increasing the cigarette tax is one of the most effective ways to reduce smoking, especially among kids. Studies show that every 10 percent increase in the price of cigarettes reduces youth smoking by 7 percent and overall cigarette consumption by about 4 percent. Maryland can expect the $1 cigarette tax increase to prevent some 52,000 Maryland kids alive today from smoking; spur 28,000 Maryland smokers to quit for good; save nearly 24,000 Maryland residents from smoking-caused deaths; produce more than $1.1 billion in long-term health care savings; and raise about $220 million a year in new state revenue, as estimated by Maryland’s Department of Legislative Services.

While the new revenue generated by the tax increase will go into the state’s general fund, the Legislature plans to use a portion of the revenue to expand access to health care for more than 100,000 uninsured Marylanders by making health insurance more affordable to small businesses and expanding Medicaid eligibility to lower income parents and other adults. Unfortunately, the Legislature did not allocate any of the new revenue for tobacco prevention and cessation programs. It’s only right that Maryland use some of the hundreds of millions of dollars it collects each year from the tobacco settlement and tobacco taxes to fight the tobacco problem. We urge Maryland leaders to increase funding for tobacco prevention to at the level recommended by the Centers for Disease Control and Prevention.

Tobacco use is the leading preventable cause of death and disease in Maryland, claiming more than 6,800 lives each year and costing the state $1.96 billion annually in health care bills, including $476 million in Medicaid payments alone. Government expenditures related to tobacco amount to a hidden tax of $627 each year on every Maryland household. While Maryland has made progress in reducing youth smoking, 16.5 percent of Maryland high school students smoke, and 6,900 more kids become regular smokers every year.

With Maryland’s tax increase, the average state cigarette tax is now $1.11 per pack. Since January 1, 2002, 44 states have increased cigarette taxes, some more than once. Maryland is now one of nine states with cigarette taxes of $2 or more. Twenty-six states have taxes of $1 or more.