U.S. Federal Issues: Tobacco Taxes | Campaign for Tobacco-Free Kids
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A Win-Win-Win Solution

Increasing tobacco taxes is a WIN-WIN-WIN solution for governments – a health win that reduces smoking and saves lives; a budget win that raises revenue and reduces health care costs; and a political win that is popular with the public.

The federal cigarette tax increased by 62 cents to $1.01 per pack on April 1, 2009, with increases in other tobacco taxes. The increases were part of legislation expanding coverage under the State Children’s Health Insurance Program (SCHIP).

In large measure because of federal and state cigarette tax increases, cigarette sales declined by 8.3 percent in 2009, one of the largest declines in years. The large increase in the federal cigarette tax helped spur more rapid declines in adult and youth smoking rates, after years without much change.

Health and Revenue Gains

The federal government can achieve additional health and revenue benefits by further increasing tobacco taxes and working toward tax equity for all tobacco products. This discourages all tobacco use and closes loopholes that manufacturers now use to inaccurately fit their products into lower-tax categories.

The benefits of tobacco tax increases are significant:

  • Health Win: Tobacco tax increases are one of the most effective ways to reduce smoking and other tobacco use, especially among kids. The evidence is clear: The more cigarettes cost, the less people smoke, especially kids.

  • Budget Win: Governments that significantly increase tobacco taxes enjoy substantial increases in revenue, even while reducing smoking and other tobacco use. Higher tobacco taxes also save money by reducing tobacco-related health care costs, including Medicaid expenses.

  • Political Win: National and state polls consistently have found overwhelming public support for tobacco tax increases. Democrats, Republicans and Independents alike want elected officials to increase tobacco taxes to help prevent kids from smoking.

Last updated Sept. 19, 2017