Hindsight, MN 2020: Cigarette Tax Increase Succeeds in Reducing Tobacco Usage
By Jeff Van Wychen, Fellow and Director of Tax Policy & Analysis
From Hindsight, Minnesota 2020 Blog
One of the reasons for increasing Minnesota’s cigarette tax was to incentivize current smokers to “kick the habit.” It appears that the cigarette tax increase is already having the desired effect. According to information from ClearWay Minnesota, “Quit attempts by Minnesotans have increased dramatically since the cigarette tax increased by $1.60 per pack on July 1, 2013. During the first two weeks of July 2013, QUITPLAN® Services received 256 percent more calls than in the first two weeks in July 2012, and saw a 289 percent increase in visits to quitplan.com.”
Long term, ClearWay projects that the tobacco tax increase enacted in 2013 will lead to a 47,800 reduction in the number of children who become addicted, a 16 percent reduction in youth smoking rates, incentivize 36,600 Minnesotans to quit smoking, and a 25,700 reduction in premature smoking related deaths.
A reduction in tobacco usage was incorporated into projections of how much revenue the 2013 tobacco tax increase would generate. As a result, the tobacco tax increase is generating about as much new revenue as it was expected to. According the most recent economic update from Minnesota Management & Budget, net tobacco tax collections are within three percent of their projected target since the tax increase took effect (through March 2014).
It is true that tobacco taxes are regressive, falling most heavily on low income households. However, the long-term health effects of the tobacco tax increase outweigh concerns over regressivity. After all, the positive health effects of the tobacco tax increase will likely be concentrated among low income smokers, since they are most sensitive to cigarette price increases and will be most incentivized to quit as a result. There are many ways we can change the tax code to help low income households; giving them access to cheap carcinogens should not be one of them.
http://www.mn2020hindsight.org/view/cigarette-tax-increase-succeeds-in-reducing-tobacco-usage
