These days, you have to really want to smoke to be a smoker. In many cities (like Philly), you can no longer smoke in public buildings or restaurants. Many workplaces are smoke-free. There are fines for smoking in the wrong place at the wrong time.

And now, it just got even more expensive.

On Wednesday, the single largest federal tobacco tax increase ever takes effect. Yep, ever. The federal tax on cigarettes will jump from 39 cents per pack to $1.01 per pack, a more than 250% increase. Taxes on chaw (that’s what we folks down South call chewing tobacco), cigars, and pipe tobacco will see similar increases.

The rate hike is expected to raise nearly $33 billion over the next 4-1/2 years used to fund insurance for children’s health care. Interestingly, the Bush administration had opposed almost identical legislation in 2007.

The increase is not an insignificant number. Dr. Timothy Gardner, president of the American Heart Association, claims that “every time that the tax on tobacco goes up, the use of cigarettes goes down.”

As if that wasn’t enough, in a move that’s raising eyebrows, tobacco giant Philip Morris raised its prices between 71 cents and 81 cents a pack in advance of the legislation. Their CEO says if you don’t like it, complain to Congress about the tax. Apparently, the folks at Philip Morris believe that it’s okay to put extra cigarette money in their own pockets but not the Treasury.

So, I know what you’re thinking: who even smokes anymore? The statistics show that about one in five adults in the United States smokes cigarettes. That includes our President, who may be remembered in years to come as one of the most anti-smoking Presidents in history if the current Congress has its way. Go figure.

The tax is expected to deter younger smokers more than older smokers. Experts believe that the rate of younger smokers will drop by about 6-7%. That’s higher than the predicted overall drop of about 4%.

Why does DC even care about smokers? Consider these stats: according to the CDC, cigarette smoking results in an estimated 443,000 premature deaths each year, and costs the economy $193 billion in health care expenses and lost time from work. Those are staggering numbers.

But does it mean that tobacco is any worse than, say, alcohol or fatty foods? Should we make it harder to buy beer and wine? Or cheese fries? Or god forbid, chocolate cake? These are tough questions. Where do we draw the line?

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Author

Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.

Comments

  1. I never smoked, but I am a heavy user of high fat over-processed foods. If taxing them can modify my behavior in ways I have not been able to, I welcome it. Even just putting nutitional info on menus would help.

  2. BS. Congress doesn’t give a rusty you-know-what about whether or not people smoke — all they want is the tax revenue. And if they achieve their so-called goal of reducing smokers, what will happen? Revenues will go down. Then who will pay for children’s health care? If smoking is so bad, and it is, why don’t they just ban it? Then we can have a war on smoking just like the (very successful ha ha) war on drugs. All this will do is drive the black/gray market in cigarettes and light up indian sales. Using taxes to control behavior has failed in the past, and so will this. It’s all about money! IMHO.

  3. I’m a smoker. I live in Arkansas: we had a 56c per pack tax increase on March 1, so with the Fed increase that’s +$1.18 per pack — add in Philip Morris’s (and everyone else’s, you can bet) average 76c a pack price increase and you get a $1.90+ price increase for a pack of smokes. (For a smoker) I’m not stupid — I smoke the cheapest cigs I can get (we call ’em floor sweepin’s); I figure if I’m going to take them home and set fire to them, I ought not spend any more than is absolutely necessary.

    Late in February I bought a bunch of smokes for $21.40 a carton. Next Wednesday I’ll have to spend $4.00+ a carton — almost twice as much.

    My solution? I say (t0ned down for publication) SCREW THIS CRAP, I’m going to quit! I’ve already cut my smoking in half over the past few months. I’m going cold turkey; I’ve done it before and after a few days it’s pretty much OK. (Don’t ask why I started up again . . .) I’m going to magnet a $5 bill to the refrigerator and every time I get a yen I’ll ask myself is it worth that much to puff for one more day?

  4. PS . . . That was supposed to be $40.00+ a carton for what I used to pay $21.40. I might add that in AR we also pay a 7.5% sales tax on top of all those other taxes.
    I kind of agree with TexasEd that, to the governments, it’s more about the $$$ revenue than anything else. “Sin” is the easiest thing to tax, so we lay it on tobacco and alcohol. We ought to legalize marijuana — imagine the taxes we could collect there! Just replece the dealer’s high costs and profits with taxes and users don’t even notice! Imagine the taxes we could collect on cocaine, crack, heroin — surely Nevada makes some nice tax $ off prostitution?

    We don’t even have to “legalize” anything — we just euphemistically “decriminalize” it.

    And think of the g0vt’s savings when they don’t have to spend $billions upon billions to chase after druggies and build prisons to put them in! We could use the money for research into producing yummy but non-lethal chocolate cake!

    Because if you tax or take away my chocolate cake, you will end up in a world of hurt!

  5. Kelly Baker Reply

    I disgust this tax!!! It was bad enough that cigarettes have been going up, but now they included roll your own tobacco. Just tax toilet paper, we ALL use that!!!

  6. Premature death? costs $190 billion now. A later death (and I assume we are talking about the illness that may precede it which costs so much–death is realtively cheap) is inevitable and will cost much more in future dollars. Death may only be put off, not stopped. If everybody quits smoking at once, and all these extra people live longer and 20% more get sick and die with the nonsmokers–there is going to be a really big health cost crunch if this happens.
    The reason the tax on tobacco has been raised is because after the real estate loan fiasco caused by the government, forcing banks to give loans to people who really don’t quality, and the subsequent payout of billions of dollars to save the banks and give out golden parachute deals to criminals, the feds have to find the least likely minority group to be supported by the public when they seize their money by way of taxation.
    It’s nothing to Obama with his income to pay more tax should he buy a pack of cigarettes. I’ll bet the majority of people who smoke are over 55. Oh, sure we should all just quit, it would improve our health. Easier said than done.
    The people of the state of California voted down an additional tax on tobacco last year for the reason that it was unfair to add yet more tax burden on one group. We don’t get to vote on what federal taxes are to be levied.
    If you wonder why obesity is such a problem these days, it’s not just the high fructose corn syrup and sedentary lifestyles. It’s probably because they don’t smoke any longer, or didn’t start. They have to put up with crappy, mind-numbing jobs, deal with more and more rude people, wait forever on the phone to the “customer service” department, look at grafitti all day, get 50 or more junk e-mails about how we need bigger you-know-whats, even if we’re women, fill out reams of forms for everything, put up with paying health care for illegal aliens and their children, get diseases from illegal aliens, listen to people talking loud into cell phones everywhere, and listen boom-boom-booms which shake your house from cars of teenage boys an teenage 35-year old boys. Stress levels are high, the lower the income level.
    As for no risk or cost to the taxpayers when people overeat or drink too much–both of these habits cause health problems which insurance or state and federal agencies have to pay for–it comes out of your pocket too.

  7. Fact: Second hand smoke harms NOBODY, never did. Read the studies and learn for yourself the deception involved or shut up.

    Fact: I’ve smoked for 30 years and have never received a penny from anyone for my “healthcare” nor have I observed ANY other smokers getting such help. It astounds me what the media and liberals can get people to believe.

    Fact: The Nazi’s employed an anti-smoking campaign identical to what you see in the USA today. It’s about control and targeting a group of people. This has been an experiment of sorts and now they know how easy it is to generate hatred towards a targeted group of people.

    Fact: They will not get one more red cent from me or my husband in tobacco taxes.

  8. FreeAmericanHaHaHa Reply

    Gasoline is unnecessary as well. People need to walk more like they do in communist red China.

    People lived without Air Conditioning 100 years ago. We don’t need it. It promotes global warming (even though we are in a 10 years global cooling trend with record low temps recorded world wide).

    Lot’s of people die of heart attacks every year. We need butter, cheese, vegetable oil, ice cream etc. taxes too for people’s own good. A double bacon cheeseburger at McDonalds SHOULD run at around $49. The goverment could take all off that useless money that people are throwing away and give it to the needy (General Motors, Meryll Lynch, Bank of America, etc.).

    Land of the free… (puuuttthhhhhh HA HA HA) sorry, sorry, I’ll try to compose myself.

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