Transcript INCREASING THE TOBACCO EXCISE TAX

INCREASING THE
TOBACCO EXCISE TAX
A WIN, WIN, WIN FOR
<STATE>
A PUBLIC HEALTH WIN
A BUDGET WIN
A POLITICAL WIN
Tobacco’s Toll in U.S.
• Tobacco is the leading preventable cause of
death, killing more than 400,000 each year
• Tobacco kills more people than from AIDS,
alcohol, car accidents, murders, suicides, and
fires combined
• Tobacco results in $96 billion in annual health
care costs
• Nearly 90% of lung cancer cases, 1/3 of total
cancer deaths, and 1 in 5 deaths from heart
disease are tobacco related
Tobacco’s Toll in U.S.
• 3,500 kids try their first cigarette every day
• About 1,000 more kids become regular daily
smokers every day; one-third will die from
smoking-related diseases
• 20.0% of high school students smoke
• 25.7% used some tobacco product in the last
month
• 20.6% of adults currently smoke
IN <STATE>
• XX tobacco-related deaths annually
• XX kids try first cigarette each year
• XX additional kids become regular daily
smokers every year
• XX kids alive today will die from tobacco
use
• XX% of <STATE> high school students are
current smokers
• XX% of high school males are current spit
tobacco users
IN <STATE>
• $XX billion in annual health care
costs related to tobacco use
• $XX million in Medicaid costs alone
• <STATE> taxpayers pay $XX per
household to treat tobacco related
disease
TOBACCO EXCISE TAXES
• A win for public health
• A win for state budgets
• A win among voters
“The single most direct and reliable method for
reducing consumption is to increase the price
of tobacco products, thus encouraging the
cessation and reducing the level of initiation of
tobacco use.”
Taking Action to Reduce Tobacco Use
National Academy of Sciences
Institute of Medicine
1998
“It is clear that price has a pronounced effect
on the smoking prevalence of teenagers and
that the goals of reducing teenage smoking
and balancing the budget would both be
served by increasing the Federal excise tax
on cigarettes.”
Myron Johnson
Philip Morris Research Executive
1981
MANY OTHERS AGREE
• U.S. Surgeon General
• National Cancer Institute
• U.S. Centers for Disease Control & Prevention
• Task Force on Community Preventive Services
• President’s Cancer Panel
• Institute of Medicine of the National Academies
• World Bank
• World Health Organization
• Wall Street Tobacco Analysts
Total Cigarette Prices and Cigarette Sales
31000
$4.50
29000
$4.00
$3.50
25000
$3.00
23000
$2.50
21000
$2.00
19000
17000
$1.50
1970
1973
1976
1979
1982
1985
1988
Sales
1991
1994
Price
1997
2000
2003
2006
Price (Jan. 2007 dollars)
Sales (million packs)
27000
"This is the tipping point," Voelz said. "People are saying, 'I know they are going to
keep increasing the cigarette tax, so I'm going to quit.' “
Tax hike could be habit-breaking
Health
Commissioner
Judy Monroe wanted an even higher cigarette tax.
Officials expect 23,000 Hoosiers to quit smoking,State
almost
40,000
youthsDr.
not
to start
The data are clear, Monroe said: More smokers will quit as the price of cigarettes
rises. Although lawmakers increased Indiana Tobacco Prevention and Cessation's
July 1st, 2007
budget this year by more than $6 million, to $16.2 million, that amount is less than the
Michael Malik
$35 million recommended by the Centers for Disease Control and Prevention for an
effective anti-smoking program.
Mary Ann Morrett has had enough. The 44-cent tax increase on cigarettes that goes into effect
today made her two-pack-a-day habit too expensive. She's going
totax
quit.
The
is expected to bring in $206 million by 2009; $1.2 million of it will go to
“This is the tipping point,” Voelz
said. “People are saying, ‘I know
they are going to keep
Indiana Tobacco Prevention and Cessation.
"I can save myself some money by quitting smoking," Morrett
said.
increasing the cigarette tax, so
Gov. Mitch Daniels, Sneegas and Monroe on Wednesday announced a new antiMorrett, 56, Indianapolis, is just one of the expected thousands
who
will campaign
quit smoking
because
the adult Hoosiers quit.
I’msmoking
going
to quit.’”
aimed
at helping
tax increase makes it unaffordable.
The $380,000 plan, titled "There's never been a better time to quit," is a statewide
Based on two decades of federal data, state officials expect 23,000
Hoosiers to kick
the habit
in their patients to quit smoking and directing
blitz encouraging
doctors
to advise
the next year because it is too expensive. Nearly 40,000 youthssmokers
won't start
smoking
because
to local
resources
thatofcan help them quit.
the increase.
“I can save myself some Daniels said the tax hike will have an immediate and lasting effect on Hoosiers.
Those numbers are a small fraction of the 1.5 million Hoosiers,"The
including
1.1impact
million of
adults,
whoprice is on dissuading young people or nonsmokers
biggest
a higher
money by quitting
smoke. Indiana had the fifth-highest smoking rate in the nation from
in 2006,
an itimprovement
the Daniels said.
taking
up in the firstfrom
place,"
previous year, when
the
state
ranked
second.
smoking,” Morrett said.
Call Star reporter Michael Malik at (317) 444-6253.
Karla Sneegas, executive director of Indiana Tobacco Prevention and Cessation, said the
smoking rate declined because so many communities -- 33 across the state -- passed sweeping
anti-smoking ordinances.
The data are clear, Monroe said:
More smokers will quit as the
price
of cigarettes
The tax hike, to 99.5 cents per pack from 55.5 cents, will primarily
fund health
care for the state'srises.
The estimated number of people who quit reduced the state's smoking rate by a percentage
point, Sneegas said.
working poor and childhood immunizations. But officials hope it will have the added benefit of
persuading Hoosiers who smoke to quit.
Peggy Voelz, who coordinates cessation programs in Bartholomew County, said inquiries from
smokers wanting to take a cessation class are up by one-third.
Stagnant Prices; Stagnant
Smoking Rates
• Youth:
– Between 1997 and 2003, avg. U.S. price rose by
90.5% and high school smoking declined by 40%.
– Between 2003 and 2007, avg. price increased by
13%, and high school smoking decreased by 9%.
• Adult:
– Between 1997 and 2003, price rose by 90.5%, and
adult smoking declined by 12.5%.
– Between 2003 and 2008, price increased by 17.1%,
and adult smoking declined by about 4.6%.
Effects of a 10% Increase
in the Price of Tobacco
• Nearly 7% decline in youth prevalence
• A 2% decline in adult prevalence
• A 4% decline in overall consumption
Tobacco Taxes are Most
Effective with:
• Kids
• Pregnant Women
• Lower Income Populations
Tobacco Taxes & Pregnant
Women
XX% of pregnant women in <STATE>
smoke cigarettes
10% increase in price produces 7%
decline in smoking
This is 3-4 times the effect as among
smokers in general
Stopping Smoking During
Pregnancy Means:
• Fewer low birthweight babies and attendant
health problems
• Immediate medical cost savings for caring
for low birthweight babies
• Fewer cases of spontaneous abortion,
neonatal mortality, and SIDS
• Less exposure of babies to secondhand
smoke
“Some women would prefer having smaller babies.”
-- Joseph Cullman, then Board Chairman, Philip Morris, Jan 3, 1971
Importance of Funding Tobacco
Prevention with Part of Tax
• Combination of tax increase and
prevention program will be most effective
in reducing smoking.
• Industry price cuts and promotions (i.e., 2for-1 offers, etc.) can undercut tax impact,
so program is essential to success.
Adult Smoking Prevalence in Washington State
(BRFSS)
25%
State smoke-free law
went into effect on
12/8/2005.
22.6%
20%
16.5%
State cigarette tax
increase to $1.425
per pack on 1/1/02.
15%
State cigarette tax
increase to $2.025
per pack on 7/1/05.
10%
5%
The state tobacco prevention program has been consistently well-funded
since it was implemented in 2000.
0%
2001
2002
2003
2004
2005
2006
2007
Benefits of a $1.00 Tax Increase
in <STATE>
• XX fewer future youth smokers
• XX fewer adult smokers
• Saving XX deaths from a smokingcaused death
Tobacco Taxes & State Revenues
• Despite inevitable declines in cigarette
consumption …
• Increasing tobacco taxes ALWAYS
increases state revenues
Tobacco Taxes, Packs Sold,
and State Revenues
State
Decline
in Packs
-30.6%
Nat’l
Decline
in Packs
-4.7%
Revenue
Increase
+ 140.2%
New
Revenue
$128.0 M
State
IA
Date
2007
Increase
Amount
$1.00
MD
2008
$1.00
-27.1%
-4.2%
+ 45.8%
$126.9 M
SD
2007
$1.00
-25.8%
-5.0%
+ 115.4%
$31.8 M
TX
2007
$1.00
-21.0%
-5.0%
+ 191.7%
$1.0 B
WI
2008
$1.00
-15.0%
-4.2%
+ 93.9%
$283.0 M
The Texas Tax Experience
From $0.41 to $1.41 on 1/1/07
Packs Sold
Revenues Collected
- 21.0%
1400
+ 191.7%
1.2 Billion
$1.5 Billion
$1,600
1200
1.0 Billion
1000
$1,200
800
$800
600
$523.4 Million
400
$400
200
0
1/2006 - 12/2006
1/2007 - 12/2007
Orzechowski & Walker, The Tax Burden on Tobacco monthly reports
$0
1/2006 - 12/2006
1/2007 - 12/2007
The Maine Tax Experience
From $1.00 to $2.00 on 9/19/05
Packs Sold
Revenues Collected
- 12.3%
100
+ 76.5%
93.5 Million
82.0 Million
75
$200
$165.1 Million
$150
$93.5 Million
50
$100
25
$50
0
$0
9/2004 - 8/2005
9/2005 - 8/2006
Orzechowski & Walker, The Tax Burden on Tobacco monthly reports
9/2004 - 8/2005
9/2005 - 8/2006
The Montana Tax Experience
From $0.70 to $1.70 on 1/1/05
80
Packs Sold
Revenues Collected
- 42.0%
+ 36.5%
71.0 Million
$100
$70.1 Million
60
$75
41.2 Million
$51.3 Million
40
$50
20
$25
0
1/2004 - 12/2004
1/2005 - 12/2005
Orzechowski & Walker, The Tax Burden on Tobacco monthly reports
$0
1/2004 - 12/2004
1/2005 - 12/2005
Tobacco Taxes & Revenues
• Stable; smoking declines are gradual
• Predictable; much easier to estimate than
personal or corporate income tax revenues
• Adjustable; any declines can be offset by
additional increases
• Produce health cost savings; declines in
consumption offset by savings in health
costs
Massachusetts Cigarette Tax
Revenues, 1990-2009
(in millions)
$600
Rate increased by
$1.00 to $2.51 per
pack on July 1, 2008.
$500
Rate increased by
25¢ to 76¢ per pack
on October 1, 1996.
$400
$300
Rate increased by
25¢ to 51¢ per pack
on January 1, 1993
Rate increased by
75¢ to $1.51 per pack
on July 25, 2002.
$200
$100
$0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Orzechowski & Walker, The Tax Burden on Tobacco, 2008, and monthly reports
Maryland Cigarette Tax Revenues,
1990-2009
(in millions)
Rate increased by
$1.00 to $2.00 per pack
on January 1, 2008.
$400
Rate increased by 34
cents to $1.00 per
pack on June 1, 2002.
$350
$300
$250
Rate increased by 30
cents to 66 cents per
pack on July 1, 1999.
Rate increased by 3
cents to 16 cents per
pack on June 1, 1991.
$200
$150
$100
Rate increased by 20
cents to 36 cents per
pack on May 1, 1992.
$50
Orzechowski & Walker, The Tax Burden on Tobacco, 2008, and monthly reports
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
19
90
$0
Benefits of a $1.00 Tax Increase
in <STATE>
• $XX million in new tobacco tax
revenues
• $XX million in 5-year savings from
reducing smoking during pregnancy
and reduced heart attacks and strokes
• $XX billion in long-term healthcare
savings from smokers averted
• $XX million in long-term state Medicaid
program savings from smokers averted
Tax Evasion Issues
• There will be some, especially initially, but it will die
down
• Revenue estimates take this into account
• Additional tax revenue far offsets any tax losses
from crossborder sales, etc.
• Health and other benefits far outweigh these issues
• Most cigarettes purchased by the pack, not the
carton
• Can take measures, like new stamps, that will reduce
tax evasion and generate additional revenue
State Cigarette Tax Rates
• Average cigarette tax rate: $1.34 per pack
• 2 states with a tax rate at $3.00+ per pack:
Rhode Island
Connecticut
• Another 13 states with tax rates at $2.00+ per
pack:
Alaska
Arizona
Washington, DC
Hawaii
Maine
Maryland
Massachusetts
Michigan
New Jersey
New York
Vermont
Washington
Wisconsin
• Another 13 states have tax rates of at least
$1.00 per pack:
Arkansas
Delaware
Florida
Iowa
Minnesota
Montana
New Hampshire
Ohio
Oklahoma
Oregon
Pennsylvania
South Dakota
Texas
State Cigarette Tax Rates
(cents per pack)
State Average: $1.34 Per Pack
WASHINGTON
202.5
MONTANA
170
OREGON
NORTH DAKOTA
44
156
IDAHO
118
57
WYOMING
64
UTAH
87
COLORADO
84
CALIFORNIA
ARIZONA
200
200
136
KANSAS
MISSOURI
79
17
OKLAHOMA
ARKANSAS
103
115
91
98
TEXAS
200
HAWAII
141
160
36
IN
125
99.5
WV
55
KENTUCKY
60
TENNESSEE
62
MS
ALASKA
PENNSYLVANIA
OHIO
ILLINOIS
NEW MEXICO
275
MICHIGAN
IOWA
NEBRASKA
NEVADA
69.5
NEW YORK
252
153
60
80
VT
WISCONSIN
SOUTH DAKOTA
MAINE
VT:224
MINNESOTA
68
NH
NH: 178
MA
MA:251
CT
RI:346
CT:300
NJ:270
DELAWARE:160
30
MARYLAND:200
VIRGINIA
DC:250
45
NORTH CAROLINA
SOUTH
CAROLINA
ALABAMA GEORGIA
42.5
200
7
37
LOUISIANA
FLORIDA
260
133.9
States that have not passed tax
increases since 1999
States that have recently passed or
implemented a cigarette tax increase
(since 1999)
State tax rates on
tobacco products other
than cigarettes vary
greatly between states.
December 2009
A Political Win
Note: If you have data from your own
state poll, use those data; otherwise,
you can use the following slides from
a January 2010 national poll.
Support For Increasing State Tobacco Taxes
National Survey of 847 Registered Voters
January 2010
Poll Highlights
•
Increasing the tobacco tax is the most preferred way to address state
budget shortfalls.
– A strong majority of voters favor raising the tobacco tax as a way to
address the state budget deficit, while no other option tested received
majority support.
– In fact, voters overwhelmingly oppose other tax increases or spending
cuts that may be necessary to address the budget deficit.
•
Two-thirds of American voters support increasing the state tobacco
tax by $1.00 per pack.
– This support remains strong across all demographic groups, including
party lines. A majority of Democrats, independents and Republicans
favor increasing the tobacco tax.
•
There is no difference in support between a $1.00 and a 50-cent
tobacco tax increase.
•
A majority of voters across party lines would vote for a candidate who
supports increasing the tobacco tax over a candidate who opposes
increasing the tax.
Increasing The Tobacco Tax Is The Most Preferred
Way To Address State Budget Deficits
As you may have heard, virtually all states are currently facing severe budget deficits. I am going to read you a list of proposals that have
been suggested as a way to address the state budget deficit. After I read each one, please tell me if you FAVOR or OPPOSE that proposal.
Oppose
Increase the state tobacco tax
38% -11
-27
47
13
Reduce funding for road maintenance
and construction
70%
Increase the state sales tax
72%
-18
-54
8
17
Reduce funding for health care
programs
74%
-20
-53
10
12
Reduce funding for state law
enforcement
78%
-58
10
10
Increase the state income tax
76%
-57
7
12
20%
-30
-40
-21
-18
10
17
26%
25%
22%
20%
Increase the state gasoline tax
80%
-16
-64
6
13
19%
Reduce funding for education
81%
-16
-65
10 7
17%
Reduce funding for Medicaid services
81%
10 6
16%
-100
Total numbers are rounded
Darker shading indicates stronger intensity
-21
-80
-60
-60
-40
-20
0
60%
20
40
60
80
International Communications Research Survey
January 2010
Voters Favor A One Dollar Increase
in the State Tobacco Tax
Would you FAVOR or OPPOSE a one dollar per pack increase in the state tobacco tax, with part of the revenue dedicated to a
program to reduce tobacco use, particularly among kids, and the rest dedicated to addressing the state budget deficit?
100
80
Total Favor: 67%
14
60
Total Oppose: 31%
40
53
7
20
24
0
Favor
Darker shading equals stronger intensity
Total numbers are rounded
Oppose
International Communications Research Survey
January 2010
Support for a One Dollar Tobacco Tax Increase
Remains Strong Across Party Lines
Would you FAVOR or OPPOSE a one dollar per pack increase in the state tobacco tax, with part of the revenue dedicated to a
program to reduce tobacco use, particularly among kids, and the rest dedicated to addressing the state budget deficit?
100
80
70
67
68
64
60
40
31
35
28
32
20
0
All Voters
Total numbers are rounded
Democrat
Favor
Independent
Oppose
Republican
International Communications Research Survey
January 2010
A One Dollar Tobacco Tax Increase Receives
Majority Support Across the U.S.
Would you FAVOR or OPPOSE a one dollar per pack increase in the state tobacco tax, with part of the revenue dedicated to a
program to reduce tobacco use, particularly among kids, and the rest dedicated to addressing the state budget deficit?
100
80
68
67
71
67
63
60
40
31
31
31
35
24
20
0
All Voters
Total numbers are rounded
North East
North Central
Favor
Oppose
South
West
International Communications Research Survey
January 2010
Voters Support a Tobacco Tax Increase
There Is No Difference In Overall Support Between A $1 And A 50-Cent Increase
$1 Increase
50-cent Increase
100%
100%
90%
90%
80%
67%
80%
70%
70%
60%
60%
50%
50%
31%
40%
30%
20%
20%
24%
strong
10%
0%
31%
40%
30%
53%
strong
67%
50%
strong
24%
strong
10%
0%
Favor
Darker shading equals stronger intensity
Total numbers are rounded
Oppose
Favor
Oppose
International Communications Research Survey
January 2010
Voters Prefer A Candidate Who Supports
Increasing the Tobacco Tax
Candidate X supports a one dollar per pack tobacco
tax increase with part of the revenue dedicated to a
program to reduce tobacco use, particularly among kids,
and the rest used to address the state budget deficit.
Candidate Y opposes the plan to increase the
tobacco tax one dollar per pack because our
state taxes are already too high.
80
59%
60
22
35%
40
11
20
37
24
0
Candidate who supports tax
Darker shading equals stronger intensity
Total numbers are rounded
Candidate who opposes tax
International Communications Research Survey
January 2010
Voters of All Parties Prefer a Candidate Who Supports the
Tobacco Tax
Candidate Y, who opposes one dollar
per pack tobacco tax increase
Candidate X, who supports the one dollar
per pack tobacco tax increase
Candidate Who Opposes Tobacco Tax
All Voters
35%
-11
Republican
36%
-9
-27
40% -14
-26
Independent
Democrat
-60
30%
-50
-40
Darker shading equals stronger intensity
Total numbers are rounded
-24
-9
-30
37
29
-10
29
37
-21
-20
22
17
45
0
10
20
21
30
40
50
60
59%
+24
58%
+22
54%
+14
66%
+36
70
International Communications Research Survey
January 2010
Even 4 out of 10 Smokers Support a
One Dollar Tobacco Tax Increase
Would you FAVOR or OPPOSE a one dollar per pack increase in the state tobacco tax, with part of the revenue dedicated to a
program to reduce tobacco use, particularly among kids, and the rest dedicated to addressing the state budget deficit?
100
74
80
67
60
53
44
40
31
24
20
0
All Voters
Total numbers are rounded
Smokers
Favor
Oppose
Non-Smokers
International Communications Research Survey
January 2010