Cigarette Taxes and Rates of Smoking

Proposition B would raise the tax on tobacco products by 73 cents. Missouri’s current tax rate of 17 cents per pack of cigarettes is the lowest in the nation and has not been increased for over a decade. With the proposed increase Missouri would still be in the bottom half of states in tobacco tax rates.

According to the Center for Disease Control and Prevention (CDC), 25 percent of Missouri adults (aged 18 or older) are cigarette smokers. Missouri has the third highest percentage of smokers in the nation, according to the CDC.

One of the arguments often used to promote higher tobacco taxes is that additional taxes will encourage current smokers to quit and deter younger smokers from starting the habit.

Does research support these statements? Over the years numerous economic studies in peer-reviewed journals have documented that cigarette tax or price increases reduce both adult and teen smoking. While there are variances in the studies, the general consensus among researchers is that every 10 percent increase in the real price of cigarettes reduces cigarette consumption by approximately three to five percent, reduces the number of young-adult smokers by about three percent and reduces the number of teen smokers by about six or seven percent.

A new study on smoking in New York released in Sept. 2012 by Research Triangle Institute (RTI) had interesting results. New York’s cigarette tax of $4.35 per pack is the highest in the nation. Overall the study showed that the state’s rate of adult smoking dropped by 28 percent from 2003 to 2010, while the national rate for the same period dropped only 11 percent. During those years the rate for New York high school students dropped 38 percent, compared to a national drop of 17 percent.

Researchers noted that along with the high cigarette tax New York also has a comprehensive smoke-free air law, and effective prevention and cessation programs.

The study also noted that that while low-income New Yorkers (making under $30,000) smoke less than their national counterparts, there was not a significant drop in their cigarette use because of the higher taxes. In fact the report noted that low income New Yorkers spend almost a quarter (23.6 percent) of their annual household income on cigarettes compared to a rate of 14 percent for low-incomers nationally. The RTI study concluded that although high cigarette taxes are an effective method for reducing cigarette smoking, they can impose a significant financial burden on low-income smokers. The complete RTI study can be found here.

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