Whichever way the election goes on Tuesday, one group could be very unhappy about the outcome. No, not Democrats or Republicans; we’re talking about smokers. Ballot measures in four states could end up costing tobacco users hundreds of dollars more per year.
Voters in California, Colorado, Missouri, and North Dakota will decide whether their states should hike cigarette taxes. For pack-a-day smokers, those proposals would translate to, respectively, $730, $639, $219, and $642 more a year for Uncle Sam, says Thomas Briant, executive director at the National Association of Tobacco Outlets.
Opponents of the measures say it’s unfair that a minority should foot the bill for public programs that benefit everyone, while advocates of raising taxes frame it as a public health issue. Increasing tobacco prices is the single most effective way to reduce consumption, according to the Centers for Disease Control and Prevention. For every 10% that prices go up, consumption goes down by 3% to 5%, the CDC estimates.
States currently tax cigarette sales anywhere from 17¢ per pack in Missouri to $4.35 in New York; the average is $1.65. Between 2008 and 2012, proposals to raise state cigarette taxes plateaued as legislatures dealt with the effects of the recession, but this year the issue has come back, says Scott Drenkard, the Tax Foundation’s director of state projects. In fact, it’s the first time as many as four states put cigarette taxes on the ballot since at least 1989, Briant says.
According to Briant, supporters of cigarette taxes are turning to ballot measures because they haven’t had much success with state legislators. As rates of smoking have declined—16.8% of Americans in 2014, down from 22.8% in 2001—so has tobacco’s potential as a tool to drive state tax revenues. Erika Sward, assistant vice president at the American Lung Association, cites the tobacco industry’s influence over some state legislatures as another reason why supporters are appealing directly to voters.
While jacking up cigarette prices can encourage some smokers to quit, others might just go look for cheaper substitutes. A 2015 study by the Tax Foundation found that large differences in taxes across state lines lead to an increase in black-market sales. Smuggled cigarettes purchased cheaply in one state and sold in another make up more than 20% of consumption in 15 states. New York leads the inbound smuggling rates with 58% of its cigarette coming from other states, the report found, followed by Arizona (49.3%) and Washington (46.4%). Meanwhile, New Hampshire has the highest outbound rate, at 28.6%, followed by Idaho (24.3%) and Virginia (22.6%).
The American Lung Association’s Sward urges lawmakers and voters to support equalized tax hikes on all tobacco products to eliminate financial incentives for cheaper alternatives. She is also hopeful that smuggling can be tackled once the Food and Drug Administration enforces a track and trace strategy by assigning a unique bar code to each pack of cigarettes.