State Excise Taxes On Cigarettes – What’s Your Take?

Yes, we know – cigarettes are bad for you and not too many people dispute that fact. They also supposedly increase everyone’s health care premiums and medical costs, making them public enemy #1 sometimes. One way that states are trying to both raise money for insurance coverage and reduce the amount of people smoking is by raising the taxes owed on each pack of cigarettes. According to The Tax Foundation, these per-pack taxes range anywhere from a low of $.07 in South Carolina to a high of $2.75 in New York State. This is in addition to whatever the packs are being sold for at retail, which in New York makes a pack of cigarettes about $7-$9 depending on where you get them. That is a lot to pay for something whose only job is to give you cancer, and if you smoke a pack a day that would be $2,920 at $8 a pack over the course of a year. That is a lot of money. So here is my question – do you support making smokers pay higher taxes on every pack of cigarettes? Should they, because of the damage they are doing to themselves, have to pay more into the health care fund in every state through these taxes?

This is a very big debate in most places right now, as some people say they shouldn’t because it is a personal choice, while others think that everyone who eats a Big Mac should also pay more in taxes on fast food because of the health issues that go along with it. What about people who drink every night? Smoke cigars? Drive too fast? I am just curious as to what people think about these type of things and where we should be drawing the line. I am not sure that taxing smokers makes up for all the other people who do terrible things to their health, and I almost think it is unfair to target only them for these funds. What do you guys think?

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Comments (16)

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  1. I have no problem with it. Of course, I’m not a smoker.

    I think you hit the nail on the head: there’s no redeeming angle to smoking cigarettes. The health result is entirely negative. And I think the government has every reason to heavily tax something that damages health in order to subsidize health care. Add the damage of second hand smoke, and there’s really no excuse not to tax the hell out of cigarettes. I have no problem taxing things that should be curbed and subsidizing things that should be promoted.

    The government also taxes alcohol and driving, as you know. Even though there are documented health benefits to drinking in moderation. I don’t have any problem with the government taxing these behaviors, because they should be pursued in moderation. I only wish that the more each car was driven, the higher the tax. Currently, we only pay a fixed yearly registration tax on each vehicle.

    In principle, I wouldn’t have a problem with a junk food tax either, provided it went to fund health care or nutrition education. But I know the lobbyists would get their say such that any proposed tax would be so unevenly applied as to render it meaningless and unfair.

    Just my two cents.

  2. Annie Jones says:

    I am a former smoker. I quit about 7 years ago, I agree that smoking is bad for the smoker’s health and for those who breath his second-hand smoke, and I am bothered by being in establishments or homes where there is a lot smoke in the air.

    That said, I think it is a personal choice whether a person smokes or not and I do not support tobacco taxation. I also would not support junk food taxation. I am not convinced the taxes are being used (or in the case of junk food, would be used) as intended, and I am certainly not convinced that taxing as a deterrent will convince people to quit smoking or eating foods that are bad for them.

  3. I wish my state would raise their tobacco taxes. We have the second lowest tax rate for cigarettes in the nation. They tried to raise it by 75 cents a couple years ago but it was voted down. A lot of non-smokers voted against raising the tax because they were against any tax increase. It would have had a better chance at passing if they would have tried for a smaller increase.

    There is a limit to how high you can raise cigarette taxes though. Once you get them as high as in New York it results in illegal activity such as smuggling of cigarettes from other states.

  4. Mark Asbell says:

    Forget taxing this and that and then arguing about it endlessly. I’m all for the Fair Tax plan – at least from what I’ve heard about it so far. It would eliminate any unfairness in sales tax AND income tax and would simplify tax code immeasurably.

  5. Craig says:

    I am not opposed to these types of taxes. Not necessarily for the moral issues, but just that they are going to tax everything, why not start here. Soon they will probably tax soda and candy as well.

  6. David says:

    Craig, it’s about to happen in NYC already on soda.

  7. Craig says:

    @David I knew I read about that somewhere and wasn’t just pulling that out of no where. Thanks for clearing it up for me and everybody.

  8. hustler says:

    I’m on the fence about this. I used to smoke and it was very difficult to quit. I always said, once they reach a certain amount per pack I’ll quit. So it will cause some people to quit, while others will just pay more. Plus, if all vices are taxed this way, as many are, at what point does it become out of hand? Taxes on soda seems legit, but in that aspect almost anything could be taxed as a vice.

  9. J-Bird says:

    I have zero problem with a tax on cigarettes. Considering all the health costs that they causes, to both the smoker and (if the smoker is irresponsible) to those around the smoker, it seems reasonable to me that the taxes are higher. Of course, I live in Canada, where we have universal healthcare and the taxes are higher on both cigarettes and alcohol. The idea is that you’re going to be larger pull on the healthcare system, so you “pay-in” through the product tax. I’m not a smoker, but I do drink; the taxes are embedded in my mind as part of the cost, I don’t see it as “this is what I SHOULD be paying, and this is how much the government rips me off by”, and I worked as a wine buyer for years, so I know what the differential is!

    I wouldn’t be opposed to a tax on junk food either. When people make a choice to over-indulge in things that are known to be bad for their health, I think there should be a price attached. Everything in moderation.

  10. David says:

    I kind of agree, because if we tax cigarettes, why not junk food, alcohol, etc? They are all bad for us.

  11. Adam - NPF says:

    This is actually a case study in most economics courses about elasticity. The logical pothole that the governments hits everytime is that they have dual incompatible goals.
    1) Reduce smoking (higher price = less demand)
    2) Increase revenue (higher taxes = more revenue

    The problem is that the goals are mutually exclusive. If there is less demand because of the higher prices, revenue will also decrease. Similarly if revenue increases, then this isn’t an incentive to quit smoking.

    A third problem that New York has made famous is that while smoking is hard to quit (thus cigarettes are an inelastic good), consumers have the ability to buy these goods in many places. Instead of accomplishing either goal, smokers now cross state lines to buy their cigarettes enriching other states and providing no incentive to quit.

  12. Brian says:

    I think this will bite them in the rear. If they raise taxes to a certain level, people will buy from the web. I was able to buy Dunhills for less than Marlboros a while back. It just took about 3 weeks to receive them.

  13. Wren says:

    I’m a social smoker (read: a couple cigarettes a month), but I’m all for taxing the hell out of cigarettes. It’s good for everyone! The services from taxes benefit everyone, and smokers get a nice nudge in the direction of avoiding cancer/not dying/living longer. What’s not to love?

  14. I have no problem with a tax on cigarettes which have a large number of negative externalities. I believe, in general, that people should pay for the full cost of a product at the register, rather than after the fact through taxes.

    Other products should be taxed according to the negative externalities that they cause as well, whether they be Cheetos, home heat fuel, plasma TVs, or whatever. Only by paying the “full” price of a product at the time of purchase will we have any incentive to curb our use of dangerous, deadly, polluting, etc. products.

    It’s been estimated that if you take into account all the factors need to deliver a gallon of gasoline to the pump, and then pay for all of the health problems, etc. that result from the use of gasoline, it would cost about $12/gallon. We pay for this anyway, so why not be up front about it?

  15. Craig Eliot says:

    Yes, I think the price should be very high so that people just forget about them … and I smoke occasionally. With these prices, the occasional craving goes away a LOT faster!

  16. Tax them all you like. I don’t smoke.

    Actually, Id rather see the government cut programs and spending rather than tax everything to the hilt like they have done for years.