On April 1, 2009 the U.S. Federal excise tax on
cigarettes will increase from US$0.39 to US$1.01 per packet of 20. In addition,
individual states impose excise taxes ranging from US$0.07 in South Carolina
(although there is a movement in 2009 to increase this by US$0.50) to US$2.575
per pack in New Jersey, with a median state tax of US$1.00 on January 1, 2008.
The main reason cited for governments imposing taxes on cigarettes is to offset the costs to society of cigarette smoking.
That cigarette smoking is hazardous is indisputable.
U.S. manufacturers have admitted as much, and have settled lawsuits based on
years of misleading advertising by paying billions in reparations. The societal
costs of smoking are based on analyses of health care costs, increased
insurance rates and lost productivity due to illness and early death.
A life cycle analysis of the actual cost of cigarette
smoking was described in The Price of Smoking, a book by Duke University health economists published in 2004. According to their analysis, the actual cost of smoking to the individual smoker, their family, and to the society
at large comes to approximately US$40 per pack. This amount includes
the cost of the cigarettes, taxes, life and property insurance, health care costs for the smoker and the smoker's family and lost productivity due to
disability. Of this, the smoker pays about US$33, leaving a burden
of about US$7 to be paid by others.
Interestingly, the extra cost to society for
individual smokers only amounts to about US$1.44 per pack - when the cost to the
smokers' families are not factored in. This is because of savings to private
pensions, Social Security and Medicare due to premature death. This amount is
offset by the excise taxes to be enacted, however the remaining costs still must
be borne by the society as a whole. These numbers indicate that, at
least in 2004 numbers, the additional excise tax above current levels
should be increased by about US$5.66 per pack to cover all the costs.
To argue that the cost of taxes is inordinately paid by lower income people neglects to consider that society bears a higher cost for this demographic because they are less likely to have access to health insurance, are likely to be diagnosed at a later stage, and a greater portion of their care will be paid by government agencies. Ironically, this is the main point in
by the Campaign for Tobacco Free Kids which is cited as the basis for the "onerous burden on the poor" argument.
Starting smoking is a choice. Quitting smoking is a very difficult task. Increasing the cost of cigarettes to more closely reflect the true cost to society does not "force" anyone to quit smoking. It forces them to make an economic choice as to whether they are willing to pay the true cost of their habit, or would rather spend their money on something else.