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Higher taxes: Would you quit smoking?

A proposal to raise the federal cigarette tax would increase the per-pack rate to $1.95. Too expensive for you?

By MSN Money Partner Apr 22, 2013 12:07PM

This post comes from Karen Datko at partner site Money Talks News

Money Talks News logoYou've probably heard that President Barack Obama has proposed a 94-cent-per-pack increase in the federal tax on cigarettes. The additional $78 billion in revenue collected over 10 years would be used to pay for expanded preschool education -- called "Preschool for All."

Image: Man smoking (© Steve Mason/Photodisc Blue/Getty Images)The federal tax last increased in 2009, from 39 cents to $1.01 per pack -- prompting lots of complaints from smokers. The new tax would nearly double the rate.

The Campaign for Tobacco-Free Kids estimates the increase would prevent 1.7 million kids from becoming smokers, thus preventing 626,000 premature deaths and saving $42 billion in health care costs. The organization says that 18.1% of high school students are smokers and that nearly 1,000 kids pick up the habit every day.

It also says the higher tax would "prompt 2.6 million adult smokers to quit and save 18,000 lives by 2021."

The prediction about youth smoking makes sense. Young people have less spending money, and many are too smart to pick up a habit that ruins your health and makes your breath stink.

But what about the adult smokers out there? Ask yourself, if you smoke, or ask loved ones who do whether that higher tax would make cigarettes unaffordable or too expensive to rationally justify the behavior.

Let's look at what you're spending on tobacco right now.

In addition to the federal tax, smokers are paying state taxes on cigarettes and perhaps local, taxes too. A chart from the Federal of Tax Administrators (.pdf file) listing the state tax in all 50 states and Washington, D.C., as of Jan. 1 identifies the states with the highest cigarette taxes as:

  • New York, $4.35 a pack. (To get the rate by carton, multiply by 10.)
  • Rhode Island, $3.50.
  • Connecticut, $3.40.
  • Hawaii, $3.20.
  • Washington state, $3.025.

The five lowest state tax rates are:

  • Missouri, 17 cents.
  • Virginia, 30 cents.
  • Louisiana, 36 cents. The legislature there is currently considering an increase, as are lawmakers in some other states.
  • Georgia, 37 cents.
  • Alabama, 42.5 cents.

The average cost of a pack of cigarettes in the U.S. is $6 (more than $2,000 a year for a pack-a-day habit), but can a pack can cost as much as $14 in New York City, CNN says.

Yet, research suggests that those who've been smoking for years are willing to continue smoking despite price increases, although they might adjust by cutting back.

The Washington Post reported on a Congressional Budget Office study about the impact if the federal tax were raised by just 50 cents. The Post said:

A few years after the hypothetical tax increase took effect, the number of 12- to 17-year-olds who smoked cigarettes would be about 5% lower than it would be otherwise, the number of 18-year-old smokers would be 4.5% lower, the number of 19- to 39-year-old smokers would be almost 4% lower, and the number of smokers age 40 or older would be about 1.5% lower.

Of course, tobacco companies hate talk of a new tax, arguing that it would tie a government program to a revenue source that is bound to decline as fewer people smoke and would unfairly penalize low-income people, who are more likely to be smokers than higher-income folks are. The Campaign for Tobacco-Free Kids disputes those arguments.

What do you think? Would a higher tax on cigarettes finally convince you or smokers in your life to give up the habit? Share your thoughts below.

If you want to quit -- now or if Congress approves a higher tax rate -- there's plenty of free help for that. Use your favorite search engine to find help in your area.

More from Money Talks News and MSN Money:

Apr 22, 2013 6:07PM

We have a bad habit of taxing things of which we disapprove.  Tobacco is an addiction and raising the price has little or no effect on addicts.  It's just another way for the feds to grab more money.  If pre-schools need more money we should all be chipping in, not only the smokers.  Of course cutting a bit more from the Pentagon wouldn't hurt either.

Apr 23, 2013 8:47AM
Another 28 bucks a month for smokes ?  One less trip to the local restaurant and the money comes out of the owner's pocket. Problem solved. That's check and mate. Any other bright ideas ?
Apr 22, 2013 2:25PM
I am in favor of a tax increase, but .94 is too much. It should be maybe .25 or .30 per pack. It also should be used to slow down the growth in the deficit or to fund anti-smoking campaigns, not fund preschool programs. I can't believe I actually agree with the tobacco companies! They are right that the revenue stream from the cigarette tax will go down as people smoke less.

Apr 23, 2013 3:48PM
I think see we (the working, tax paying people) pay vicariously for many smokers health care (including the many smokers on Medicaid) isn't it, in a way, coming out of our pocket anyway? I think most of us know a welfare/medicaid recipient who has many sinus infections, bronchitis, etc trips to the doctor (many to the emergency room, because, after all, they don't have to pay or be accountable), then the issue of second hand smoke for their children, and to watch so many people die of COPD directly related to smoking, I think they DO need to feel the pinch somewhere, because WE do!  If one is truly struggling, smoking, eating and  drinking out, and lottery tickets should be the first thing to go!
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