Policy Documents

Utah Cigarette Tax Is More than Meets the Eye

September 22, 2008

In an effort to vilify the legal act of smoking, anti-tobacco groups in Utah are pushing a $2 per pack cigarette tax, with the help of very provocative and misleading statistics on health care costs.

Utah smokers in 2007 paid $73.5 million to the state government in cigarette excise and sales taxes. That figure doesn't include other taxes smokers (and non-smokers) pay to fund government and Medicare programs.

Vanderbilt University Professor Kip Viscusi's study analyzing the costs smokers impose on society debunks what anti-smoking lobbyists claim. He found, "excise taxes on cigarettes equal or exceed the medical care costs associated with smoking." He estimated the medical costs of smoking to be 23.6 cents per pack. Utah's current cigarette tax is nearly triple that.

Utah's cigarette taxes are much too high to pay for the "social costs" imposed by smokers. Cigarette tax proposals such as these have other fundamental problems and should be labeled for what they truly are: an unstable and regressive tax increase targeting a minority of citizens combined with yet another hike in government spending all wrapped in one fiscally irresponsible package.

This combination makes cigarette and other "sin" taxes a bad fiscal policy that nevertheless appeals to politicians wanting to raise revenue without angering most taxpayers.

The following articles offer additional information on the regressivity, impact on non-smoking taxpayers, and other side effects of cigarette tax hikes.


Smoke Tax: Saddling Smokers with Costs of Health Reform isn't Fair
http://www.sltrib.com/opinion/ci_10471954?source=rss
This Salt Lake Tribune editorial explains that a $2 tax on each pack of cigarettes is not equitable and will disproportionally hurt people at the bottom of the economic spectrum. It also outlines how smokers are already contributing an enormous sum of money to Utah's government.

Debunking the "Tax Thee, But Not Me" Myth: Five Reasons Why Non-Smokers Should Oppose High Tobacco Taxes
http://www.ntu.org/main/press_issuebriefs.php?PressID=1001&org_name=NTU
This National Taxpayers Union study found, "the per-capita state and local tax burden in high-tobacco tax states is 8 percent above the national average, while the general tax bill for residents of low-tobacco tax states is 15 percent below the national average."

Poor Smokers, Poor Quitters, and Cigarette Tax Regressivity
http://www.heartland.org/policybot/results.html?articleid=19564
Dr. Dahlia Remler with the Department of Health Policy and Management at Columbia University rebuts the argument that cigarette taxes are not regressive.

Tax Hikes Often Fail to Generate Expected Revenues
http://www.heartland.org/Article.html?articleId=22891
Economists warn that tobacco taxes are an unpredictable source of revenue.

Six Reasons Not to Raise Tobacco Taxes
http://www.heartland.org/Article.html?articleId=13816
Economist Dr. William Anderson of the Oklahoma Council of Public Affairs outlines six pitfalls of higher cigarette taxes.

Tobacco: Regulation and Taxation through Litigation
http://aei-brookings.org/admin/authorpdfs/redirect-safely.php?fname=../pdffiles/regch2.pdf
Professor Kip Viscusi breaks down the social costs of smoking, taking into consideration a wide array of factors including health costs, sick leave, and the lower pension and nursing home care costs incurred by smokers.

Cigarette Tax Burns the Poor
http://www.beaconhill.org/Portal/PDFVerClips/HeraldOpEd080416CigTax.pdf
David Tuerck, professor of economics and executive director of the Beacon Hill Institute at Suffolk University, outlines how cigarette taxes unfairly burden low-income earners.

Cigarette Taxes Are Fueling Organized Crime
http://online.wsj.com/article/SB121012081570272357.html?mod=opinion_main_commentaries
Patrick Fleenor, chief economist for the Tax Foundation, shows that high cigarette taxes have fueled organized crime and a profitable black market in New York.

Cigarette Tax Burnout
http://online.wsj.com/public/article_print/SB121841215866128319.html
Last year Maryland increased its cigarette tax to $2 a pack in order to fund health care ... but now the state's budget is facing a billion-dollar shortfall. This article outlines the budget mess that always results when states rely on cigarette tax revenues even as smoking rates decline.


For further information on the subject, you can visit The Heartland Institute's Web site at www.heartland.org, where you will find articles on the issue available through PolicyBot, Heartland's free research database.

Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, you may contact Legislative Specialist John Nothdurft at 312/377-4000 or jnothdurft@heartland.org.