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April 12th, 2008:

Let’s Blow Out Those Tobacco Tax Falsehoods

Megan Hannan and Stephanie Lash: Let’s blow out those tobacco tax falsehoods

Saturday, April 12, 2008 – Bangor Daily News

In order to keep smokers smoking and get young people addicted, the tobacco industry and its supporters will say almost anything to avoid an increase in the tax on cigarettes and other tobacco products. That’s because they know that the higher the price, the fewer kids start smoking and the more smokers quit or cut back. As a result, they resort to a series of well-worn myths based on faulty research and outright false claims that are designed to scare and intimidate — creating a smokescreen of economic woe to obscure the truth about improved health, lives saved, lower health costs, and ultimately a reduced financial burden on taxpayers and businesses. When the smoke lifts, the reality is that raising the price of tobacco products is both sound health policy and prudent economic policy.

The tobacco industry has started this year’s drumbeat of misinformation by stating that cigarette tax revenue is not a predictable source of income. Maine’s experience over the past 10 years proves that cigarette tax revenue follows a consistent and predictable pattern of steep increases after a tax hike, followed by gradual and consistent declines (of approximately 1 percent per year). Compare this to Maine’s corporate income tax revenue. During the same period, corporate income tax revenue fluctuated from $107 million to $77 million to $184 million. Cigarette tax revenue is clearly the more reliable revenue stream.

The cross-border myth is another industry favorite. The story goes that Maine smokers will flock to New Hampshire to buy their cigarettes when prices in Maine go up. The reality is that when Maine raises its cigarette tax, New Hampshire sales don’t respond. In fact, after each of Maine’s last four tax increases, New Hampshire cigarette sales per capita were lower than they had been the previous year.

Another myth is that Internet cigarette sales are growing rapidly and will only get worse with a tax increase. The truth is that less than 2 percent of Maine smokers buy their cigarettes over the Internet, and Maine’s law regulating Internet sales ensures that tax avoidance and under age sales are minimized. Most Maine residents are law-abiding citizens and this myth is both unsubstantiated and unjust.

Opponents of a tax increase also claim that the cigarette tax is regressive and that it disproportionately hurts low-income smokers. In fact, low-income people are the hardest hit by the effects of tobacco use and are specifically targeted by tobacco industry promotions. Smokers of all incomes who quit or cut back save money on both cigarettes and health care costs (a pack a day smoker who quits saves about $1,700 a year). Over 70 percent of smokers want to quit, and for some, raising the price of cigarettes may be what they need to be successful.

Those who profit from cigarettes also claim that raising the tax will hurt retailers who sell cigarettes. No data are offered to support these claims, and it is certainly difficult to have sympathy for those who put profits over health, especially the health of children and the poor. Nonetheless, logic would suggest that smokers who quit or cut back would have more money to spend on other things.

Perhaps the biggest myth is that a cigarette tax is just another tax that adds to our overall tax burden. The reality is quite the opposite. A cigarette tax actually saves money for taxpayers and businesses, not to mention the lives of our families, friends, and neighbors. A $1 per pack increase would motivate 6,000 adults to quit, keep 10,000 kids from becoming addicted smokers, save 4,700 lives, and reduce health costs by $233 million. Healthier people are more productive workers, and getting Maine’s health costs under control is one of the most important things we can do to help businesses thrive.

It’s time to cut through the myths and smokescreens and see tobacco taxes for what they are: a powerful economic tool that supports businesses, taxpayers and (Maine) families by reducing the death and disease of tobacco addiction.

Megan Hannan is director of government relations and advocacy for the American Cancer Society, New England Division. Dr. Stephanie Lash is a physician in Bangor.