Three good reasons for Pa. to hike tobacco tax

By Matthew L. Myers

As Pennsylvania leaders struggle to end a budget impasse, an increase of at least $1.60 per pack in the state's cigarette tax offers them a win-win-win solution:

A health win that will reduce tobacco use, particularly among children, and save lives;

A financial win that will help balance the state budget; and

A political win that polls show is popular with voters.

First the health win. Tobacco-tax increases are one of the most effective ways to reduce smoking, especially among price-sensitive kids. More than 11,500 Pennsylvania kids become new daily smokers every year, according to the U.S. Department of Health and Human Services, and one-third of them will die prematurely as a result. In the commonwealth, 18.4 percent of high school students still smoke, the U.S. Centers for Disease Control and Prevention report. And without strong action, according to a 2014 surgeon general's report, about 244,000 kids in Pennsylvania today will ultimately die prematurely from smoking.

Evidence shows that every 10 percent increase in cigarette prices reduces youth smoking by about 7 percent and overall cigarette consumption by about 4 percent. My organization, the Campaign for Tobacco-Free Kids, projects that a $1.60-per-pack tax increase in Pennsylvania would prevent more than 91,000 kids from becoming smokers; spur more than 100,000 adult smokers to quit; save more than 55,000 Pennsylvania residents from premature smoking-caused deaths; and save more than $3.5 billion in future health-care costs - while still generating more than $400 million in annual revenue.

The General Assembly can prevent youths' use of all tobacco products - and raise additional revenue - by establishing a tax on tobacco products such as smokeless tobacco and cigars. Today, Pennsylvania is the only state in the nation without a tax on such tobacco products. Youths' use of snuff and other tobacco products remains steady, so raising the price is critical to keep kids away.

In addition to preventing kids from ever using tobacco, state cigarette-tax increases prompt smokers to quit. For example, the Wisconsin Quit Line received a record-breaking 20,000 calls in the first two months after a $1-per-pack increase. (It typically receives 9,000 calls per year.) Likewise, in Texas and Iowa, which each increased cigarette taxes by $1 in 2007, the number of calls to the state quit lines were much higher compared with the year before.

Higher tobacco taxes are also a clear financial win. They both raise revenue and reduce health-care costs.

Every state that has significantly increased its cigarette tax has enjoyed substantial increases in revenue, even while reducing smoking. Put simply, revenue and sales data show that, after a cigarette-tax increase, the revenue gains on each cigarette sold far outweigh the revenue losses from declines in total cigarette sales. Despite industry protestations to the contrary, state tobacco taxes are a reliable and predictable source of revenue for states.

Furthermore, smoking declines caused by higher tobacco taxes will actually save money by reducing tobacco-related health-care costs, which total $6.4 billion a year in Pennsylvania, including $2.1 billion paid by the state Medicaid program, according to the CDC.

With the case so clearly in favor of tax increases, who could possibly be opposed? Surprise, surprise: Tobacco companies oppose significant tax hikes on cigarettes because they know the result will be fewer customers for their products. Smaller increases are not as upsetting because they can be offset by promotional strategies like discounts and coupons.

Big Tobacco will do whatever it can to protect and expand its market. That's why the industry spends $9.6 billion a year - more than $1 million every hour - to market its deadly products nationwide, according to the Federal Trade Commission. About $470 million is spent annually just in Pennsylvania, Tobacco-Free Kids estimates.

For policymakers, a tobacco-tax increase is a political win with Pennsylvanians across party lines. They also strongly support increasing the state tax on tobacco products. According to a Public Opinion Strategies poll in November 2014, fully 72 percent of voters favored increasing the state's tobacco tax, including overwhelming majorities of both Republicans and Democrats. Even one-third of cigarette smokers said they favored increasing the tobacco tax.

One wrinkle in this debate is the impact of the 2014 tobacco-tax hike in Philadelphia. The city's $2-per-pack increase was a much-needed step to reduce the city's youth smoking rate and address budgetary challenges. Anything that undermines that effort must be rejected. The General Assembly must ensure that any statewide tobacco tax increase does not replace Philadelphia's levy but rather supplements it.

Philadelphia can be a model for the state. Let's put all of Pennsylvania's kids and the future first by raising the tobacco tax.

Matthew L. Myers is president of the Campaign for Tobacco-Free Kids. president@tobaccofreekids.org