Kokomo Tribune; Kokomo, Indiana

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April 1, 2009

Cigarette taxes making smokers choose

Stephen Name was hoping for a break when he entered the Super Test convenience store Wednesday, but left disappointed.

Name, a two-pack-a-day smoker, was looking to try out a cheaper brand, since the Marlboro Lights he usually buys are now around $5 a pack.

“I was asking for Pall Malls, but they were out. They were trying to get me to go down to another brand, but I don’t know what those taste like,” Name said.

“I might have to practice rolling my own cigarettes — or quit,” he added. “That’s the next point.”

If Name did quit, he’d make Indiana anti-smoking advocates very happy.

Between federal and Indiana state tax increases — both justified as ways to offset rising health-care costs — the tax burden per pack has increased by $1.02 since mid-2007.

Smoking, already an expensive habit, became even more so last month, when the tobacco companies launched a pre-emptive strike on their customer base.

The federal cigarette tax, which rose from 39 cents a pack to $1.01 a pack, took effect Wednesday.

But the manufacturers hiked prices at the beginning of March, and smokers have already been paying the higher prices for three weeks.

Some, like Name, are looking for ways to economize.

Name estimates he spends $350 a month on cigarettes alone. Laid off with two children, he said the price hike “is rough.”

Even though both his kids’ health-care needs are covered by the taxpayer-funded State Childrens Health Insurance Program (SCHIP), much of the money for that program comes from cigarette taxes.

“It’s rough,” Name said. “I’ve got to pick my battles. This [tax increase] is actually hurting my family worse than it’s helping them [through SCHIP].”

If there’s any good news for smokers, it’s that the manufacturers not only passed along the tax increase, but also added in their annual price increase at the same time. That means the price shouldn’t change for a while.

To anti-smoking advocates, the tax increase is a win-win proposition.

Not only does tobacco consumption decrease with every new tax increase, but the state also sees a net increase in revenues.

Since the state tax increased by 40 cents a pack in July 2007, monthly cigarette tax revenues jumped by an average of about 45 percent, according to the Indiana Department of Revenue.

That’s somewhat remarkable, considering cigarette consumption dropped by 20 percent after the tax increase, Karla Sneegas, executive director of Indiana Tobacco Prevention & Cessation, said Tuesday.

“The truth is, the cost of smoking is becoming just too much for many Hoosiers, especially those who are struggling to make ends meet in today’s tough economy,” Shirley Dubois, coordinator of the Howard County Tobacco Coalition, said Wednesday.

“We want every smoker in our community to know that we’re here with free resources to help them break what we know is a powerful gripping addiction.”

According to the state-funded ITPC agency, research indicates that for every 10 percent increase in the price of cigarettes, youth smoking drops by 7 percent and overall cigarette consumption falls by about 4 percent.

More states are looking at smoking as a net drain on the economy, as health-care costs continue to skyrocket.

At the federal level, U.S. Rep. Joe Donnelly, D-Granger, said he voted for the expansion of SCHIP because the federal cigarette tax increase is paying to extend health care to 11 million uninsured children, including about 200,000 in Indiana.

Marcus Barlow, spokesman for the Indiana Family & Social Services Administration, said the cigarette tax funding is expected to raise the total number of Hoosier children on SCHIP to about 72,500.

Many families eligible for the program simply aren’t aware of that fact.

With tax increases apparently popular at both the state and federal level, many smokers are simply quitting.

Sneegas estimates 90 percent of active smokers want to quit anyway.

She said the state’s “stop smoking” hotline, (800) QUIT-NOW, has seen call volumes triple in the three weeks since the federal tax went into effect.

“There were more calls the week of the price increase than we normally have in a month,” she said.

Scott Smith may be reached at (765) 454-8569 or via e-mail at scott.smith@kokomotribune.com

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