Congress seems happy to pass the burden on to tobacco smokers. The bill recently passed by Congress and now on the President’s desk would more than double the federal tax on cigarettes and raise cigar taxes to as high as $3. Supporters of the proposal see the higher tobacco taxes as a beneficial “two‐fer”: not only would the tax increases raise more money for the children’s health program, they would financially penalize smokers.
Proponents claim government should use taxes to discourage tobacco use because smokers’ healthcare costs are partly borne by others, and smokers should be taxed to cover the expense. Tax proponents also argue that higher tobacco taxes will induce smokers to lead healthier lives.
Smoking in the United States is already declining significantly — largely as a result of public awareness of its dangers, not higher taxes. The declining number of smokers makes cigarette tax revenue unstable. Congress’s Joint Committee on Taxation projects that if the new tax rate is implemented next year, tobacco revenues will fall nearly 10 percent over the next decade. As Dr. Michael Siegel, professor at the Boston University School of Health has noted, this is a risky way to fund the program. “This is a situation where you’re advocating a specific amount of money to a program based on cigarette revenue,” he says. “So if that cigarette revenue falls, by definition, the revenue available to the program is going to fall.”
Tobacco use is linked to increased risk of a host of cancers and other diseases, and some of the costs of fighting smoking‐related diseases are passed on to taxpayers. But cigarettes are already heavily taxed, and the resulting tax revenues already more than offset the public costs of smoking. A landmark study of 1995 smoking data by esteemed risk analyst Kip Viscusi, now of Vanderbilt University, showed that taxes in that era more than offset the broad range of social costs from smoking.