More and more state and local governments are enacting "sin taxes" -- such as excise taxes on a pack of cigarettes -- as a way to combat budget problems or to relieve property taxes. The fiscal benefits that these taxes provide are easy to quantify. For example, the 15 cent-per-pack increase in Arlington County, Va., will raise an estimated $1.4 million.
What is the public's tolerance for cigarette taxes? Gallup's July 2004 Consumption Habits poll* shows that most Americans overall don't think cigarette taxes are too high, but smokers themselves tend to disagree.
A Nationwide Trend
Taxes on cigarettes vary dramatically from state to state, and range from a high of $2.46 per pack in Rhode Island to just 3 cents per pack in Kentucky. There is one obvious nationwide trend, however -- cigarette taxes are on the rise everywhere.
Oklahoma's 23 cents-per-pack tax is among the lowest, but a 55 cents-per-pack increase will go to the voters this fall. Nebraska's 64-cent tax is slightly lower than the 79-cent national average -- but it reflects a nearly 100% increase in that state since 2002. In July, Michigan raised its taxes by 75 cents, from $1.25 to $2.
Where the Public Stands
The Gallup Poll indicates that roughly a third of Americans (35%) think the amount of taxes on a pack of cigarettes is "too high." But a majority of the public would like to see the taxes remain at their current level or go higher; 34% say the taxes are "about right" and 25% feel they are "too low." The percentage of Americans saying cigarette taxes are too high has dipped five percentage points since 2002, while the percentage who say they are about right increased seven points.
Obviously, those who are actually paying the taxes are significantly more likely to feel cigarette taxes are too high. Seventy-two percent of smokers think the taxes are too high, compared with 23% of nonsmokers.
"I quit smoking when the price of cigarettes went from 25 cents to 30 cents per pack. That nickel difference is what put me over the edge," says Rick Johnson, a former smoker from Hilton Head, S.C. But although Johnson is amazed at how expensive a pack of cigarettes has become since he quit in the mid-1960s, he has no problem with today's high taxes on cigarettes. "Let's face it -- smoking is a bad thing …Taxes will hopefully discourage people from smoking, which is a good thing."
Real-World Consequences for Smokers
Smokers certainly face real, financial consequences from the per-pack taxes. The increased cost may make the habit cost-prohibitive, and the notion of taxing just one specific segment of the population may seem unfair to some smokers.
Jim Butler, a pack-a-day smoker from Omaha, Neb., says the higher taxes have not directly diminished his habit, but he does occasionally consider them when he sees his receipt. "I usually notice when the price of the pack is over $4. It seems that only a few years ago, an average pack would be around $2.50," Butler says.
On the topic of fairness, Butler believes the taxes should be used only for smoking-related costs to the public. "As long as they are using the taxes to offset things caused by smokers, like increased healthcare costs or research, then I am OK with it," he says. "If not, like if it is for a new road, then I think it is unfair. That would just be using smokers to pay for things that everyone gets to use."
The line on cigarette taxes is clearly drawn between smoking and nonsmoking Americans. The majority of Americans think per-pack taxes on cigarettes are about right or too low. Politicians around the country are capitalizing on that sentiment, and may see the situation similarly to the way Johnson sees it: "It [the cigarette tax] is a very simple revenue source. If it's punitive [to smokers], that's OK with me."
*These results are based on telephone interviews with a randomly selected national sample of 1005 adults, aged 18 and older, conducted July 8-11. For results based on this sample, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For results based on 224 smokers, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±7 percentage points.
For results based on 781 nonsmokers, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±4 percentage points.