States Consider Tobacco Tax Increases To Fund Health Care Programs

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Several states have soughtto increase their tobacco taxes to fund health care programs and address budgetdeficits, but efforts to increase tobacco taxes in some cases have preventedthe passage of health care proposals, the NewYork Timesreports.

According to the Tobacco Merchants Association, in 2008, 22 state legislatureshave considered bills that would increase tobacco taxes. Last year, 11 statesenacted such legislation, according to the NationalConference of State Legislatures. R.J. Reynolds Tobacco estimates that state tobacco taxesraise $14.5 billion in revenue annually and that the federal tobacco tax raises$7.3 billion in revenue annually.

"For some states, tobacco taxes are seen as a kind of magic bullet thatare really quite different from less popular kinds of taxes," RichardCauchi, a health policy analyst from the National Conference of StateLegislatures, said, adding, "Legislators are able to argue that it's a sintax, and the voters seem more accepting if they know the funds are going to beearmarked for some kind of health initiative."

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Supporters of tobacco taxes maintain that they reduce the rate of smoking amongchildren and increase revenue. However, opponents maintain that tobacco taxesare unfair for smokers and encourage illegal sales. In addition, they maintainthat tobacco taxes are not a stable source of revenue because they lead todecreased sales.

Recent Efforts
The Massachusetts Legislature has considered a proposal that would increase thestate tobacco tax by $1 per pack to $2.51 per pack to raise an estimated $175million in additional revenue to help fund a subsidized health plan as part ofa recently enacted health insurance law.

Earlier this month, the New York Legislature approved a proposal to increasethe state tobacco tax by $1.25 per pack to $2.75 per pack to raise an estimated$265 million in additional revenue for the general fund, with some of the fundsused to expand health insurance for children.

South Carolina this year "may offer the most intriguing test of whetherthe tobacco industry's might can be overcome by directly linking a tax increaseto improvements in health care," according to the Times. Thestate Senate next month will debate a proposal that would increase the statetobacco tax by 50 cents per pack to 57 cents per pack to raise additionalrevenue to fund an expansion of public health insurance programs.

In California, a health care proposal supported by Gov. Arnold Schwarzenegger(R) and Assembly Speaker Fabian Nunez (D) failed in January "partlybecause of opposition to the $1.50-a-pack increase it included," the Timesreports. Nunez said, "It's a lot of credit to give someone, but Californiaright now would have the most comprehensive health care plan in the nation, andthe tobacco industry basically killed it" (Sack, New York Times,4/21).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.

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