So here we are again. In June, our legislature passed a budget with a $500 million hole in it and some estimates point to a 2011 budget shortfall in excess of $4 billion. The situation looks pretty bleak, but it is not hopeless. If we are serious about putting our financial house in order, and making our state a healthier place, we should increase our cigarette tax by at least $1 or more as soon as the legislature comes back into session in January. In case you are counting, increasing the cigarette tax by $1 per pack will raise an additional $366 million in the first year and bring North Carolina's cigarette tax to the current national average of $ 1.45.
Increasing the tax on cigarettes and other tobacco products is not generally viewed favorably by progressive leaders. It is often called "regressive" because it tends to hit lower income North Carolinians harder than their more affluent neighbors. This is largely due to the fact that lower income residents have a higher smoking rate than the more affluent. So why should progressives support the North Carolina Alliance for Health's efforts to increase the cigarette tax by $1?
First a few facts: North Carolina's cigarette tax is currently 45 cents per pack-the 7th lowest in the nation. Even South Carolina's cigarette tax is higher than ours. As of July 1, its tax is 57 cents per pack. More importantly, in contrast to our low cigarette tax, is the huge smoking-caused heath care cost to North Carolina-for every pack sold in North Carolina it costs state tax payers $7.17 per pack in health care costs to treat the serious chronic diseases brought on by cigarette smoking. Every year, thousands of young North Carolinians begin to smoke, creating a huge long-term health and medical liability for our state.
Substantially increasing the state's cigarette tax is the surest way to keep kids from starting to smoke and one of the best ways to get adults to quit. For every 10 percent we increase the price of a pack of cigarettes, 7 percent fewer children start to smoke and the same is true for pregnant women. As prices jump up, adult smokers also quit in greater numbers. If we are worried about the impact of an increased cigarette tax on low income residents, think about the impact of a devastating tobacco related illness-like stroke, cancer or emphysema-on this same group. Or simply the cost of a pack of cigarettes-the average cost of a pack in North Carolina is almost $5.
Increasing the tax by $1 will generate $366.2 million in new revenue in the first year to help fill the budget hole and more importantly, reduce smoking among youth by 16%, preventing tobacco addiction among 84,600 of North Carolina's children. This important public health measure will also reduce smoking among adults, help 52,200 people quit smoking, and save the lives of 40,900 North Carolinians from a premature smoking-caused death. Aren't these numbers of lives saved and chronic illnesses averted worth the $1 per pack? I think so. Increasing the tax on cigarettes by $1 isn't regressive, it is a proven public health strategy to reduce smoking and will save lives.
While it is true that ongoing reductions in state smoking levels will, over time, gradually erode state cigarette tax revenues (in the absence of any new rate increases), those declines are more predictable and less volatile than many other state revenue sources, such as state income tax or corporate tax revenues (which can drop sharply during recessions, as we are seeing in the current economy). In addition, the smoking declines that reduce tobacco tax revenues will simultaneously produce much larger reductions in government and private sector smoking-caused costs.
As progressives, we are all struggling with how our state can effectively and efficiently deliver services to those most in need and how we can fairly raise revenue to support these services. We are also concerned with the health and wellbeing of our fellow citizens-especially in these difficult economic times. Increasing the cigarette tax by at least $1 won't solve all our problems, but it would be a huge step toward creating a sustainable source of revenue and most importantly would improve the lives and health of millions of North Carolinians. That's why progressives, like me, should support at least a $1 increase in the cigarette tax.
Peg O'Connell is the Tobacco Prevention Policy Committee Chair with the North Carolina Alliance for Health.
