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April 8th, 2008:

Tobacco Tax Hike Justified

OUR VIEW: Tobacco tax hike justified

April 08, 2008 6:00 AM – South Coast Today

Raising the tobacco tax makes sense.

The best benefit has nothing to do with money: It could reduce the number of young people who take up smoking, giving them years of better health and saving them the agony of quitting later in life. Existing smokers might redouble their efforts to quit, too.

But even from a purely financial perspective, the take hike is justified. Though smokers still have a right to smoke, their exercise of that right costs the public money — a lot of money.

A 2000 study by the Massachusetts Department of Public Health estimated the annual health care costs for smoking-related conditions at US$2.8 billion. An additional — and shocking — US$7.3 million is spent caring for babies who acquire smoking-related problems in the womb.

Not only does smoking cause cancer, which is expensive to treat, but some smokers develop devastating long-term health problems like heart disease and pulmonary obstruction.

If just a small fraction of those smokers is uninsured, the public will pay a hefty sum to treat them. So as Massachusetts looks for ways to cover the cost of income-based subsidies in its mandatory health insurance program, tobacco users represent a fair place to lay some of the burden.

Over the years, the state has taken a leading role on the tobacco issue, funding smoking cessation programs and raising the tobacco tax higher than other states. Massachusetts had the highest cigarette tax in the nation as recently as 2002, when it was doubled to $1.51 per pack. Since then, other states have followed suit, and the Bay State now has the 15th-highest tobacco tax.

The ranking isn’t as important as the amount of revenue it generates as a proportion of smoking-related costs. At the rate health care costs are rising, the tobacco tax — though not intended to be a direct reflection of tobacco-related spending — certainly has not kept pace.

Cigarette makers and convenience store operators, who have an obvious financial interest in keeping the tax low, warn that smokers will take their business elsewhere, namely to neighboring states or the Internet. But those who are inclined to do so are probably already doing it, since New Hampshire charges tax of just $1.08 per pack. And Massachusetts is getting more sophisticated about collecting taxes on cigarettes shipped into the state as the result of online sales. It collected $2.4 million in the six-month period that ended in January, and Gov. Deval Patrick has proposed using new technology that he says could raise the amount to $12 million a year.

So the idea that business will go out of state no longer does much to change the equation.

Massachusetts’ landmark health care law serves the public good, and it needs funding. The tobacco tax can help serve that need. If the gradual result is fewer smokers, fewer health problems and less need for the very funding that started the trend, so much the better.