Giant federal tobacco tax hike spurred historic drop in smoking, especially among teenagers, the poor, and those who depend on public health insurance, USA TODAY analysis finds.
President Obama signed a tax increase – the largest take effect in his first term – on his 16th day in office by changing two vetos by President Bush. Federal cigarette tax increased from 39 cents to $ 1.01 per pack on April 1, 2009 to finance the expansion of health care for children. Since then, the changes brought in more than $ 30 billion in new revenue, tax records show.
However, the tax hike and its effects remain largely unknown to the non-smoking public. Size of higher taxes and increased prices nationwide by 22% during the night, more than all the state and local tax hikes combined over the past decade when adjusted for inflation.
The result: higher taxes helped restart the long-term reduction of smoking, which has stalled in recent years. About 3 million fewer people smoked in the last year than in 2009, despite the large numbers of people, according to research by the Center for Disease Control and Prevention.
The tax hits hardest on families who make less than $ 50,000 a year and account for two-thirds of smokers.
“The federal tax increase was a win-win, we thought it would be, and experience shows that,” said Danny McGoldrick, vice president of the Campaign for Tobacco-Free Kids.
Teen smoking immediately fell by 10% to 13% when the tax hike took effect, says researcher Jidong Huang from the University of Chicago in Illinois. “High prices keep children from picking up cigarettes,” he says.
Higher taxes are not only smoking cause plummeted among adults since the early 1980′s and adolescents since the mid-1990s.
Health concerns, smoking buildings and marketing constraints played a role. Tobacco companies have raised their prices, too, earn fewer customers.
“It’s hard to be specific about what affects the individual consumer behavior of adults, but taxes the same connection,” said David Sutton, spokesman for Altria Group, manufacturer of cigarettes Marlboro. He said that taxes and fees are so high – 55% of the retail price Marlboro – they unfairly burden adults who choose to smoke.
Taxes sledgehammer anti-smoking efforts. Federal tax hike helped push tobacco to 18.9% in 2011, the lowest level in history, according to the CDC survey.
• Who left? Seniors and Hispanics most sharply reduced smoking, each down more than 15% from 2008 to 2011, according to the National Health Interview Survey CDC. Women give more than men. Least moved: middle-aged men, down just 1.2%.
• Health care for the poor. About 1 million adults in the Medicaid quit smoking, which could reduce future health care costs.
• The tobacco industry. Consumer spending on tobacco raised from $ 80 billion in 2008 to $ 98 billion in 2011 dollars, adjusted for inflation – even though the amount of tobacco purchased fell by 11%, the Bureau of Economic Analysis data show. Higher taxes make up about half of that cost increase. The rest went to the tobacco companies and retailers.