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$1 Cigarette Tax Increase: Killing Two Birds with One Stone?

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Kentucky health advocates say a cigarette tax increase of $1 per pack would raise about $250 million  a year. (Brett McBain/Flickr)
Kentucky health advocates say a cigarette tax increase of $1 per pack would raise about $250 million a year. (Brett McBain/Flickr)
 By Mary Kuhlman, Public News Service - KY, Contact
January 8, 2018

FRANKFORT, Ky. -- Could increasing the cigarette tax by $1 save lives and improve Kentucky's budget woes? That's what the majority of Kentucky voters say in a new poll from Foundation for a Healthy Kentucky.

When learning about the specific revenue and health benefits of a $1 per-pack increase in the cigarette tax, 7-in-10 voters polled said they were in favor. Tonya Chang, senior director of government relations at the American Heart Association in Kentucky, said the increase will lower smoking rates, especially among pregnant woman and youth smokers who are most susceptible to tax increases.

"It needs to be a significant increase to offset industry practices around discounting and price promotion,” Chang said. "Anything much less than a dollar, the industry could easily offer coupons and discounts so that individuals would not automatically feel the increase in the tax."

It's estimated that a cigarette tax increase of $1 would raise about $250 million a year and prevent some 20,000 kids from picking up the habit. Kentucky has the second-highest smoking rate in the country and is ranked 43rd among states for tobacco tax rates.

An increased cigarette tax also could help reduce health care costs associated with tobacco use, which Chang said amount to nearly $2 billion a year in Kentucky.

"Out of that, about 589 million is attributed to the Medicaid program,” she said. "If we are successful in obtaining a dollar increase in the tobacco tax over a five-year period, we're looking at a savings in Medicaid alone of about $6 million."

Chang noted that support for the increase cuts across all party lines and regions of the state. The poll found a majority favored the increase as the best way to address the state’s $150 million budget deficit, as opposed to increasing the sales tax or extending the sales tax to groceries and other currently non-taxed services.

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