Smoking tax increases Dramatic savings possible for those who can quit

The state tax increase on cigarettes that takes effect today offers plenty of incentive for smokers to consider the no-cost option: Stop smoking.
An incentive not to smoke has been uppermost in the minds of advocates who have sought an increase in Mississippi’s state tax rate – 18 cents per pack for a quarter-century – for most of the decade.
That goal, driven by health concerns, has become virtually lost in years of discussions.
A curious set of circumstances converged to finally drive a 50-cents-per pack increase to passage, with a starkly unceremonial signing into law on Wednesday by Gov. Barbour.
n The recession has ripped through Mississippi’s revenue stream like a tornado. Tax collection are projected hundreds of millions below original estimates. Cuts have been made, and larger cuts are almost certain, even with the additional cigarette tax revenue, calculated at about $113 million in fiscal 2010, the budget year that begins July 1.
n Legislators heard the thundering feet of constituents who demanded action when it became known that falling sales tax collections on new automobiles would drive up the cost of license tags. Even with the tax on cigarettes, tag costs will rise in the 2010 license purchase cycle, but precise amounts will vary by county and the value of the vehicle.
n Gov. Barbour, who originally opposed a cigarette tax increase, changed his mind because his plans for state spending require new revenue to soften the blow of anticipated cuts. Part of the new money could help finance Medicaid, which faces serious revenue issues that are far from resolution.
Of course, if the original intent unfolds as hoped, the cigarette tax revenue eventually should decline because fewer Mississippians will start smoking or continue smoking, put off by high prices.
At the same time, a drop in smoking should improve the state’s health profile, actually saving thousands of people from premature death caused by tobacco-induced illnesses.
It is hoped that as smoking-related illnesses decline the state’s cost for treating Medicaid patients and the indigent can be better controlled, if not reduced.
The financial incentives to quit are powerful. If you smoke:
n 1 pack per day you save about $150 per month;
n 2 packs per day, $300; or,
n 3 packs per day, $450.
The governor, in a logical extension of tobacco taxation, has proposed increases in taxes on smokeless tobacco products, too. We support those increases.


Joe Rutherford

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