Hawai'i Cigarette Tax Increase Delivers Victory for Kids and Taxpayers

Washington, D.C. — Hawai'i leaders have taken an important step to protect the state's kids and taxpayers from the devastating toll of tobacco use by increasing the state cigarette tax by 60 cents to $2.60 per pack on July 1 – giving the state the third highest cigarette tax in the nation. The state cigarette tax will further increase by 20 cents per pack annually in July 2010 and July 2011, reaching a total of $3 per pack. Governor Linda Lingle signed the cigarette tax increase into law Thursday. The Hawai'i Legislature also voted to override the governor's veto of legislation to also increase the tax on most other tobacco products.

Higher tobacco taxes are a win-win-win solution for Hawai'i – a health win that will reduce tobacco use and save lives, a financial win that will raise revenue for critical state programs, and a political win that polls show is popular with the voters.

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. Hawai'i can expect the 60-cent cigarette tax increase to prevent more than 5,000 kids from smoking; spur 2,400 smokers to quit for good; save more than 2,200 residents from future smoking-caused deaths; produce $110 million in long-term health care savings; and raise about $16.6 million a year in new state revenue.

Counting Hawai'i's increase and recently approved increases in Florida and Mississippi, the average state cigarette tax will be $1.27 per pack. Rhode Island has the highest state cigarette tax at $3.46 per pack. Twelve states and the District of Columbia have cigarette tax rates of at least $2 per pack, and 27 states and DC have cigarette tax rates of at least $1 per pack.

Tobacco use is the leading preventable cause of death and disease in Hawai'i, claiming 1,100 lives each year and costing the state $336 million annually in health care bills, including $117 million in Medicaid payments alone. Government expenditures related to tobacco amount to a hidden tax of $622 each year on every Hawai'i household. While Hawai'i has made some progress in reducing youth smoking, 12.8 percent of Hawai'i high school students still smoke and 1,600 more kids become regular smokers every year.