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Cigarette tax hike generates benefits

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From the Lexington Herald-Leader

Here’s hoping Kentucky shared in the national decline in teen smoking reported recently by the U.S. Centers for Disease Control and Prevention.

USA Today attributes an “historic drop in smoking,” not just among teens but across all age groups, to a 62-cent increase in the federal cigarette tax in 2009.

Raising the federal tax to $1.01 a pack has brought in about $30 billion in new revenue to the U.S. treasury.

Meanwhile, some 3 million fewer Americans smoked in 2011 than in 2009, even though the population has increased.

USA Today credits the federal cigarette tax increase with restarting a long-term decline in smoking that had stalled.

In Kentucky, the Blue Ribbon Commission on Tax Reform should take note.

Kentucky also increased its cigarette tax in 2009. But instead of the 70 cents proposed by Gov. Steve Beshear, the legislature wimped out and approved only a 30-cent per pack increase.

At 60 cents a pack, Kentucky’s cigarette tax remains well below the national average of $1.49 and is lower than four of our seven surrounding states.

That’s a big part of why Kentucky almost always leads the nation in percent of smokers, both adults and teens, and why pregnant Kentuckians smoke at double the national rate.

Smoking takes a terrible toll on Kentucky’s health and economy. Almost all smokers start by age 18, and teens are especially sensitive to increases in the cost of cigarettes.

Another increase in the state cigarette tax could produce health care savings and long-term gains in productivity as fewer Kentuckians die or are disabled from smoking.

Raising the cigarette tax would also provide needed revenue for the state.

Kentucky now gets about 3 percent of its revenue from the cigarette tax, the same as the severance tax, corporate income tax and the tax on limited liability enterprises and more than the lottery (2 percent).

The biggest sources of state revenue are the income tax (39 percent) and sales and use taxes (33 percent).

Cigarette sales took a big dip in Kentucky after the tax increase but it’s unclear how much of the decline came from fewer Kentuckians smoking and how much from a decline in sales to other states.

The most recent data for Kentucky, from the 2010 Youth Tobacco Survey, show that almost 25 percent of the state’s high-school students are smokers and almost 70 percent of teenage smokers want to quit.

A CDC survey, released in August, found that from 2009 to 2011 the smoking rate among high school students nationally went from 17.2 percent to 15.8 percent.

Reprinted from the Lexington Herald-Leader through Kentucky Press News Service.