A federal cigarette excise tax hike went into effect April 1. It may make those who still use tobacco feel like fools for choosing to have so much of their disposable income go up in smoke. And that is the point.
The federal tax is up 62 cents on each pack, from 38 cents to $1, the biggest jump ever. That tax sits on top of the Maine cigarette tax, which is at $2 per pack.
Each time government acts to protect people — a proposal to mandate motorcycle helmet use is a recent example — a familiar fault line appears. On one side are those championing the sanctity of personal choice, casting it in terms that recall the foundational values of the nation. On the other side are those who argue that one of government’s functions is to protect people from themselves, because bad personal choices inevitably affect others.
The tobacco tax approach falls neatly between both sides. On one hand, no one has proposed making cigarettes illegal. Yet driven by rising state and federal taxes, cigarettes may soon approach a prohibitive price point.
On April 2, a pack of Marlboros were $7.30 at C.N. Brown store in Orono. That means a pack-a-day smoker will spend more than $50 each week, $200 each month and more than $2,600 each year for the privilege of sucking toxins into his or her lungs.
The federal government justifies the excise tax hike by using the revenue to fund SCHIP, the State Children’s Health Insurance Program. The program serves about 7 million low-income children, and the new revenue will allow the program to serve another 4 million children.
Even at $2, Maine’s per-pack excise tax puts the state at sixth-highest in the nation, tied with several other states, says Ed Miller, executive director of the American Lung Association of Maine. That tax generates about $148 million in revenue for the state, yet Maine has $602 million in tobacco-related costs, according to the Campaign for Tobacco Free Kids.
Another wrinkle in the debate centers on “tax equalization,” Mr. Miller said. The federal tax for 20 cigarettes, 20 little cigars and enough loose tobacco to roll 20 cigarettes is equal at $1 for each. Yet in Maine, the tax for those products is, respectively, $2, 68 cents and 46 cents. Mr. Miller and others working to lower tobacco use note that beginning smokers will gravitate toward the least expensive product, so he advocates for equalizing the tax.
Opponents of tobacco taxes correctly note that it hits the poor disproportionately. Yet the disincentive-through-price strategy is not new; it underlies the federal government’s War on Drugs, driving up the cost through interdiction.
The choice remains for smokers, but unhealthful choices like smoking should be the target of market disincentives.