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NC Senate’s 15 Cent Cigarette Tax Increase Makes Little Sense

Reports are that the NC Senate’s tax plan (which could be revealed today) includes a 15 cent cigarette tax increase. This is in contrast to Governor Perdue’s call for a $1 increase in the cigarette tax. Let’s put aside the revenue raising aspects of increasing taxes on cigarettes since that’s really not the reason to tax tobacco. The overriding goal in a cigarette tax should be one thing – to get people to stop smoking and teenagers to never start. From decades of research and real-world experience we know that a substantial increase in the cigarette tax means huge numbers [1] of teens will never start smoking, many adults will quit, health costs will go down measurably so we all pay less in health premiums, and people will enjoy longer and healthier lives.

To get these benefits, any cigarette tax increase has to be substantial. A 10% per pack price increase is the minimum necessary [2] to reducing smoking rates – even according to the tobacco companies (this works out to around 40-50 cents in NC).

In North Carolina, this means that the Governor’s proposed increase of $1 would have a huge benefit while the Senate’s proposal would do nothing. Think this doesn’t stand up politically? Public Policy Polling’s work [3] on the Governor’s proposal shows that 53% of people in North Carolina support a $1 hike in the cigarette tax. And that’s across the whole state – not just in the metropolitan areas.

15 cents will have absolutely no effect on smoking rates or health costs in our state. There is no reason to increase taxes on cigarettes unless the increase is enough to have the desired effect of reducing health care costs and improving lives. The Senate’s proposal roundly fails that test.