New Mexico Cigarette Tax Increase Delivers Victory for Kids and Taxpayers, But Increase Needs to Be Permanent

Washington, D.C. — The New Mexico Legislature has taken important action to protect the state's kids and taxpayers from the devastating toll of tobacco use by increasing the state cigarette tax by 75 cents to $1.66 per pack. Increased tobacco taxes are a win-win-win solution for New Mexico – a health win that will reduce tobacco use and save lives, a financial win that will help to balance the state budget and fund essential programs, and a political win that polls show is popular with the voters. We look forward to Governor Bill Richardson signing this legislation into law. Also, to fully achieve the health and revenue benefits, New Mexico should make the increase permanent rather than allowing it to expire in four years, as would happen under the legislation.

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 about 6.5 percent and overall cigarette consumption by about 4 percent. New Mexico can expect the 75-cent cigarette tax increase to prevent 11,100 New Mexico kids from becoming smokers; spur 6,800 current adult New Mexico smokers to quit; save more than 5,300 New Mexico residents from smoking-caused deaths; lock in $259 million in future health care savings; and raise about $31.3 million a year in new state revenue.

However, by failing to raise taxes on other tobacco products to match its new cigarette tax, New Mexico's legislators have missed an opportunity to raise additional revenue and to discourage the use of all tobacco products. It is also unfortunate that none of the new cigarette tax revenue is being allocated to fund programs to prevent kids from smoking and help smokers quit. New Mexico will have the greatest success in reducing tobacco use if it couples its tobacco tax increase with well-funded tobacco prevention and cessation programs.

Tobacco use is the leading preventable cause of death and disease in New Mexico, claiming 2,100 lives each year and costing the state $461 million annually in health care bills. Government expenditures related to tobacco amount to a hidden tax of $567 each year on every New Mexico household. While New Mexico has made significant progress in reducing youth smoking, 24.2 percent of New Mexico high school students smoke, and 8,200 more kids become regular smokers every year.

With New Mexico's increase, the average state cigarette tax will be $1.36 per pack. We call on states across the nation to significantly increase the tobacco tax to reduce tobacco use and its devastating health and financial toll, as well as raise much-needed revenue to help close budget shortfalls.