September 13, 2010 Liz Borkowski, MPH 18Comment

The World Health Organization has declared that “tobacco taxes are the most effective way to reduce tobacco use, especially among young people and the poor,” but Slate’s James Ledbetter points out that in the US, there’s a portion of the smoking population that keeps on paying them:

Over the last decade or so, several states and jurisdictions have experimented with massive cigarette tax increases, as much as 100 percent or more over the existing rate. California, for example, still has a relatively low state cigarette tax, but in January 1999, it ballooned from 37 cents a pack to 87 cents. In 2002, New York City raised the tax on a pack of cigarettes from 8 cents to $1.50, an astronomical hike of nearly 1,800 percent.

Yet according to anti-tobacco activists–who are backed up by economic studies–in every single instance, these huge tax hikes have led to states collecting more revenue, even as many smokers swear they won’t pay them. Cigarettes may not quite be what economists call “perfectly price inelastic,” but millions of American smokers are willing to pay much higher taxes than economic theory would suggest they should.

Ledbetter explains that it would be fairly easy for many smokers to evade high state taxes – for instance, by making periodic trips into neighboring states to stock up on cheaper tobacco products. Yet many smokers don’t take advantage of these money-saving opportunities. Ledbetter looks to research for an explanation:

Tobacco-use surveys tell us two interesting things: 1) A majority of smokers at any given moment are thinking about quitting, and 2) 62 percent of smokers buy only packs, not cartons. A huge number of smokers, then, are too timid about their habit to buy enough cigarettes at a time to realize any substantial savings by going outside their normal buying outlets.

If so many smokers are thinking about quitting but failing to do so even when tax hikes nudge them in that direction, that tells us we need to combine tobacco taxes with smoking-cessation assistance. (After declining over the course of decades, US smoking rates seem to be stuck at around 20%.) Ledbetter points out that states have a disincentive to help smokers quit, because fewer smokers would mean less tobacco-tax revenue. Of course, it’s in states’ long-term interest to reduce smoking rates and thus tobacco-related illnesses, which reduce residents’ quality of life and economic participation as well as affecting Medicaid spending. Unfortunately for public health, budgets get made for the short term — and, as I wrote in a previous post about stalled smoking-cessation efforts, future prevention payoffs don’t compete well against current spending needs.

18 thoughts on “Why Do So Many Smokers Keep Paying High Tobacco Taxes?

  1. Wait, where are the numbers that show that higher taxes have not led to less smoking? I am not seeing them. Just because some smokers don’t respond to higher prices doesn’t mean that marginally they are not effective. And that is their purpose – as well as to be a revenue source. Is the overall incidence of smoking higher or lower when states raise taxes on cigarettes and what is the level of smoking and smoking related illness at what age?

  2. The taxes have definitely helped, and seem especially effective at keeping kids and teens from taking up the habit in the first place. The surprising thing is that there’s still a large number of smokers who keep buying highly taxed cigarettes (as evidenced by continued high tax revenue). We need to use additional strategies to reach this population and help them quit – because, as Ledbetter points out, the combination of survey data and continued tax revenue suggest that they want to quit but haven’t managed to do so yet.

  3. There is no mystery as to why people keep paying. Nicotine is addictive. And since the average person initiates smoking at 12 years of age, this addiction may represent decades of usage. As with any addiction, the compulsion to continue use, despite disincentives, trumps financial issues. Cessation is not prevention, and prevention would certainly be more cost effective.

  4. Another tax evading alternative that you are starting to see and read about more and more are these electronic cigarette products. I would’t be surprised to see the government go to work on a method to have them recategorized as a tobacco related product

  5. In the UK, smoking is positively correlated with poverty and routine/manual work, despite these groups being more affected by the increased cost. We’ve also hit a plateau at about 20% of the general population, but the demographic breakdown is fascinating, and to me suggests we need more specific targetting of the problems particularly related to vulnerable groups (eg smoking rates among males of Bangladeshi heritage is nearly twice the general population rate; in NE England, women are more likely to smoke than men – why?).

  6. Ledbetter explains that it would be fairly easy for many smokers to evade high state taxes – for instance, by making periodic trips into neighboring states to stock up on cheaper tobacco products.

    Sure, if the person happens to be close to a state border where the other state has lower tobacco taxes. (I live in New Hampshire, where we see so much of this behavior with alcohol that the state, who has a monopoly on distilled liquor, puts liquor stores directly on major highways.) Not everybody is so fortunate–if you live in San Francisco it’s a minimum three-hour trip, each way, to get out of state, and that’s with direct access to an interstate highway pointed in roughly the right direction and a willingness to speed. You need to buy significant quantities of cigarettes to overcome the cost of fuel and time for the trip. Most poor people don’t have enough money at one time to make such a trip.

  7. First, there’s a noteworthy reduction in smoking prevalence. Probably the number of cigarettes smoked per smoker is less as well. May be a cause of the increase in adiposity in the American population.

    Second, the prevalence of smoking in older ages is a balance between rate of quitting and rate of resuming. Reducing the rate of resuming should be a target as well as promoting cessation. Which means identifying the life events which are associated with resumption.

    Work related psychocial stress, and the stress associated with work related musculoskeletal disorders should be considered.

  8. My opinion as an outside observer of family and friends who smoke is that smoking outdoes even crack and meth as an addiction. It’s not only the nicotine rush, it is the whole habit from opening to prepping to smoking, etc.

    Considering the rest of my family (except my younger sister) I should have become a smoker at some point. Which would have been disastrous because of various respiratory illnesses I’ve had. But I got grossed out by my favorite grandparents’ really heavy smoking habits and the whole idea was just nasty to my mind. which was a Good Thing.

    I’m not allergic to it, it really isn’t that annoying except that if I’m in a place with lots of smokers I want to shower when I get home because the smell gets into my hair.

    And while I encourage my smoking friends to quit, i don’t ride them about it because I know how hard it is to quit successfully. That junk is way too addictive and it was pretty much government encouraged at some points in history.

  9. no doubt, cigarrette smoking is one of the most tenatious addition to get rid of off. Well, from my own expirience I can tell for what happpened to me in my strugle to stop smokin. First, after more than 20 years of been clean from nicotine, I reestarted smoking again. Like the first time, for me was a determinarion to stop. I thought it out and said to miself: enough is enough, the price of a pack of.
    cigarrett is to high; beside, it ruining my health. So just recently, woke up at my regular morning hour, drank my coffe, the when was to look fo my cigarretts I
    realized my forgetting to buy a pack the night before. After a couple of sips from my coffe cup the nicotine craving became absolutely quasi unmanageable, still I was able to controlled it from pure
    determination. I must confess that this very first day of quitting my tobaco addition was not easy at
    all. The second day was a little less difficult to control my nicotine impulses; but, aha! the third day
    was, at least, manageable; fouth day, a lot better. Then as the day passed by the urges to have a
    smoke was diminishing to the point that it basically became less a phisiological urge than a
    mental one.
    In conclusion, once it’s been determined that quitting smoking is in order, for obvious reasons, what.
    the smoker need to know so he or she would be prepare is the fact that the first couple of days will
    be challenging, but after that, it’ll be like a piece of cake. Believe me

  10. If everything could be done through taxes, life would be very, very simple.
    That 20% plateau indicates that you could halve smokers in a country by raising taxes, but you cannot reach zero smokers.
    If you go on raising tobacco taxes beyond some point, you’ll get a black market. Tobacco will go underground, pretty much the same with illegal drugs.
    You can push sth underground either by making it illegal or by taxing it heavily. Two roads towards the same end.

  11. Face it: there is a certain percentage of the population who will keep smoking because they are seriously physically addicted and cigarette taxes are unfairly regressive as more people with lower incomes smoke more than those with higher incomes. Rather than raising taxes any further, those who sell tobacco should be required to sell quit aids right alongside them. Doctors tell me that using gum or the patch vs. the cigarette is far less harmful, and I know every time a smoker buys a pack, the decision to quit or not is in his or her mind. And by the way: liquor should be proportionately taxed as well– it also kills. I would add refined sugars to the list of harmful but commonly used dangerous substances that should be taxed, but the food industry is even more powerful than tobacco and booze, so fat chance sugar will be taxed, pun intended.

  12. Anybody who thinks increasing taxes is a way to get people off the nicotine habit is either stupid or dissembling. In the case of governments my bet would be dissembling.

    Taxes are a small price to pay for an addictive habit.

    Consider that those addicted to heroin, grass, or other flat out outlawed substances will do almost anything to feed their habit, virtually all of which end up in long prison sentences.

    The price paid for smoking, as somebody pointed out here more addictive then any of the other drugs, is thus far higher than the fine (That’s really what the tax is when you know it won’t stop the practice) imposed by governments talking the health talk but really mostly only interested in the money.

    The solution is not taxation nor imprisonment but rather (The data show both the legal and illegal narcotics used to alleviate onerous conditions) to resolve the social conditions that are associated with the habits.

    That of course means the problem is a political one that invokes the “S” word that means an end to social strata living high at the expense of others.


  13. Taxing us for smoking is a bit like Sharia law stoning a woman to death for getting raped. I am responsible for my actions, but like many others I took up smoking when it was as acceptable and mainstream as having a cup of coffee. Ronald Reagan appeared on billboards with his suggestion I smoke Chesterfields, the Army put them free in my c-rations, and the VA hospital furnished them if I was without. Madison Avenue spent a fortune convincing me how popular and handsome I would be with a particular brand between my fingers, and how my girl had come “a long way baby” with those Virginia Slims. But she isn’t here anymore. Can you guess how she died? I am not completely alone though, I belong to a group. I’m sure you have seen us. We stand outside the building a few times each day, huddled together, not saying much at all. The real coup de grâce is the feeling of guilt we share for being there, looking like vagrants in a soup line. I did this to myself, and I have to live with the consequences. Yep, it was my choice, made with all the wisdom I possessed at age twelve. But thanks for being concerned enough about me to levy a high tax on my addiction. I always knew you cared.

  14. One thing missing here.
    As it’s missed in most of these circular discussions.

    All this Semi-literate postulation by Semi-educated Web Scientists is naught more than badly disguised self aggrandizement or worse.
    If you Had to file an article this week, Why did you chose to dive into the wilderness of individual behavioral manipulation by legislation? Why did you try to do it so Wholly unprepared?
    You, and your commenters, display the same impulse.
    Pick a few quotes out an article about a report of a summary of a badly constructed evaluation of a badly administered study that was funded by an organization with an axe to grind.
    Pick the one you remember because it reinforces your preconceptions.
    Then go toss off a spurious comment. and congratulate yourself for contributing a blinding insight to the sum of human knowledge.

    How about you:
    Find the difference between Addiction and Habituation, and the combination. Recognize the scope of the issue, and just sit quietly and sympathize.
    Find the real data on cessation rates. Then make a guess about the effects of counter tobacco initiatives. Then call your Congressman
    and tell him that vice taxes are just flat stupid.

    Better yet, Ask a Smoker.

    If you’ve never smoked, you have no clue.
    You are not gonna put the time, or attention,
    focus, or motivation into getting one.
    If you want to rant about the spread social costs of tobacco addiction, or the risks of second hand smoke, Hows ’bout you focus your spite on Helmet laws or School Lunches or Anything you have something that approaches personal experience with.

    If you actually quit, you were never grabbed. And, have no idea the bullet you dodged, or what the rest of us face. Go find another self improvement project. Try Yoga.

    If your still smoking, the rest of this useless banter is irrelevant.

    Best available estimates are 70% of people that start smoking, Die smoking.
    10% of smokers die prematurely for reasons directly related to smoking.
    This ratio is well below that of a large number of other tracked behaviors.
    Neither of these numbers have changed significantly in the last 30 years.

    Those who quit permanently, do regain life expectancy. However this gain does not follow the simple ratio of 1 year back for each year smokeless as claimed by the ALA.
    it is in fact, an -almost- imperceptible bell curve that peaks at 15 years post cessation.

    Public education, childhood intervention, and access laws have been shown effective at slowing adoption.

    However, the handy, simplistic, lies that constitute the vast preponderance of Mass Media Messaging are laughable to the average pre-adolescent.
    By and large, such use of funds is to anyone who cares to examine, reprehensibly irresponsible.
    It’s useless, obviously so, and those who engage in these initiatives do so for reasons completely divorced from the mission they claim to support.

    Public policy, including taxation has no perceptible effect on either cessation or cessation success rates.
    It is just bad arithmetic to tout that taxes have succeeded by putting tobacco products out of the economic reach of certain ill defined populations like the ‘Very Poor’ or the ‘Young’.
    Even if there were a way to bracket these people, the claim that any non-interventive tobacco policy impacts them well enough to justify either public expense or the private economic load, is lucridous.
    Juxtapose this with things like the barriers to health related life skills posed by diminished access to education, or geographic mobility, or factors like Sales and Use taxes on things like Power, Fuel, OTC medicines, ad nausem.

    Vice taxes are not reinvested in addressing the vices they exploit. It has been thus far, impossible to gauge the proportion of such levies that are actually re-appied.
    It is, in my personal opinion, minuscule.
    There is no reliable, independent indicator and I’ve looked. hard.
    Estimate yourself, if you wish, the money collected in tobacco taxes, and the money spent on ‘education’. Or, the money collected in Alcohol taxes compared to that spent in medical remediation of it’s effects.

    In the case of tobacco dependence, There is One, and Only one useful response to those of my, and the 1/2 dozen or so following generations. This is Effective Cessation Assistance. And, there is no such thing. yet.

    Short of that, vice taxes not applied directly and immediately to well thought, effective, truthful and accessible education, and remediation are just plain punitive.

    You may sit comfortably wrapped in the assurance that others bear the brunt of this at best, misguided and, more likely cynically deliberate policy.
    After all a tax dollar out of somebody else’s pocket, saves a few pennies out of yours. Yes?

    That is the way of things. But, at least, don’t sink to the level of convincing yourself that you acquiesce to the evil for the greater good.

    You’re sponging off somebody else’s misfortune. Deal with it.

  15. I guess in a country that would rather facilitate pharmaceutical-company profit making than prevent death and disability among its population, rejecting a drug like thalidomide would indeed be the wrong choice.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.