North Carolina Should Increase Cigarette Tax by at Least 50 Cents to Save Lives and Raise Revenue

Washington, D.C. — We urge North Carolina legislators to take a stand to protect the health and pocketbooks of North Carolina families by heeding Governor Bev Perdue's call to include a 50-cent cigarette tax increase in the state budget. While a larger cigarette tax increase would produce even greater benefits, an increase of at least 50 cents — to 85 cents a pack — would be an important step toward protecting the state's kids and taxpayers from the devastating toll of tobacco. The state's current tax of 35 cents is the fourth lowest in the country and the national average is $1.31 a pack.

While the North Carolina Legislature grapples with a $4 billion budget deficit and potentially devastating cuts to state services, including many vital public health programs, other states are turning to tobacco tax increases to raise new revenue and dramatically reduce health care costs by reducing smoking. This year alone the following states have increased their taxes: Arkansas, Delaware, Florida, Hawaii, Kentucky, Mississippi, New Hampshire, New Jersey, Rhode Island, Vermont and Wisconsin.

These 11 states have recognized that increasing tobacco taxes is a win-win-win solution — a health win that will reduce tobacco use and save lives, a financial win that will raise much-needed revenue and reduce tobacco-caused health care costs, and a political win that is popular with voters. Seventy-nine percent of North Carolina voters support an even higher tax increase of $1.

Governor Perdue initially proposed a $1 increase, which would have yielded even greater health and fiscal benefits. Unfortunately, the House of Representatives included no cigarette tax increase in its budget, and the Senate has discussed a minor increase of no more than 15 cents, which would produce few — if any — public health benefits and only minimal revenue increases, since the tobacco companies can easily nullify such a small increase with coupons and other price promotions.

Even with a 50-cent increase, at 85 cents per pack, North Carolina's cigarette tax will still be well below the state average of $1.31 per pack.

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. North Carolina can expect a 50-cent-per-pack cigarette tax increase to prevent some 43,400 North Carolina kids alive today from becoming smokers, spur 26,800 North Carolina smokers to quit for good, save 20,900 North Carolina residents from smoking-caused deaths, produce more than $1 billion in long-term health care savings, and raise $210 million a year in new revenue.

Currently, Rhode Island has the highest state cigarette tax at $3.46 per pack. Fourteen states and the District of Columbia have cigarette tax rates of at least $2 per pack, and 27 states and the District of Columbia have cigarette tax rates of at least $1 per pack or more.

Tobacco use is the leading preventable cause of death in North Carolina, claiming 12,200 lives each year and costing the state $2.46 billion annually in health care bills, including $769 million in Medicaid payments alone. Government expenditures related to tobacco amount to a hidden tax of $578 each year on every North Carolina household. In addition, 19 percent of North Carolina high school students currently smoke, 39,600 North Carolina kids try smoking for the first time each year and 11,800 more kids become regular smokers every year.

We call on the General Assembly to pass a cigarette tax increase of at least 50 cents to reduce the devastating toll of tobacco in North Carolina.