Tobacco giant Reynolds American said on Monday that the state legislature of North Carolina is considering passing a tax bill to raise $35 billion to expand its SCHIP (State Children’s Health Insurance Program) by raising the amount of tax on the sale of a pack of cigarettes by 156%.
North Carolina is not the first state to impose huge sales taxes on cigarettes and other tobacco products ostensibly to discourage new smokers and encourage established smokers to quit, while at the same time filling the state coffers with a lot of money in tax revenues.
In this journalist’s home state of New Jersey, large cigarette taxes were first imposed in 1998, essentially doubling the price of cigarettes. New York state imposed the same tax at the same time.
My first-hand observations, usually backed by the testimony of smokers, are that relatively few people have been inspired to quit smoking because of the dramatic increase in prices, while the New Jersey government rakes in huge amounts of additional money by capitalizing on a practice that it has stated is harmful to people’s health.
Furthermore, since that time New Jersey has imposed new laws on smokers, banning all public smoking in enclosed spaces except for very limited floor space in casinos and in places specially catering to smokers such as cigar bars.
Many critics are angry at the double standard that they allege is practiced by New Jersey, which also advertises a state-sponsored program to help people quit smoking with personalized counseling programs.
“If they think it’s such a bad thing for you to do, then they should just ban smoking altogether. But they don’t, because they’ll lose all that money,” said a close friend of mine when New Jersey put into action the ban on public smoking in April of 2006. She has smoked since she was a teenager.
Reynolds American has said that it will be publishing a report essentially saying the exact same thing about what the North Carolina state legislature is planning to impose on people in the name of a tobacco tax.
“Proponents of this tax aren’t comfortable acknowledging that government makes more money from the sale of cigarettes than any entity actually engaged in the tobacco business. They are equally uncomfortable acknowledging this tax will primarily hit low- and middle-income individuals, and that in order to generate the revenue they want to expand this government program, they need people to smoke,” Tommy J. Payne, executive vice president of public affairs for Reynolds American Inc, said in the press release.
“Policy makers will somehow need to recruit new smokers if they insist on using the tobacco tax revenue to support SCHIP at proposed funding levels over the long term,” wrote Heritage Foundation authors Michelle C. Bucci and William W. Beach.
Sources of information used to research this news story:
Reynolds American (PR Newswire), “The New Tax Policy: Max the Tax on Lower Income Individuals; Recruit New Smokers to Pay for Government Health Program”