Smoke Breaks Just Got More Expensive

62-Cent Tax Increase Takes Effect; Money To Be Used To Finance Health Insurance Expansion

(AP)  However they satisfy their nicotine cravings, tobacco users are facing a big hit as the single largest federal tobacco tax increase ever takes effect Wednesday.

Tobacco companies and public health advocates, longtime foes in the nicotine battles, are trying to turn the situation to their advantage. The major cigarette makers raised prices a couple of weeks ago, partly to offset any drop in profits once the per-pack tax climbs from 39 cents to $1.01.

Medical groups see a tax increase right in the middle of a recession as a great incentive to help persuade smokers to quit.

Tobacco taxes are soaring to finance a major expansion of health insurance for children. President Barack Obama signed that health initiative soon after taking office.

Other tobacco products, from cigars to pipes and smokeless, will see similarly large tax increases, too. For example, the tax on chewing tobacco will go up from 19.5 cents per pound to 50 cents. The total expected to be raised over the 4 1/2 year-long health insurance expansion is nearly $33 billion.

Smokers are mulling their options.

Standing outside an office building in downtown Washington last week, 29-year-old Sam Sarkhosh puffed on a Marlboro Light. His 8-year-old daughter has been pleading with him to quit, he explained, and he has set a goal to give up smoking by his 30th birthday.

"I'm trying to quit smoking, and it could help," said Sarkhosh, an information systems specialist. "I don't think it will stop me from buying cigarettes every now and then, but definitely not as often." A friend who smokes Camels went out and bought four cartons in advance, he said.

The tax increase is only the first move in a recharged anti-smoking campaign. Congress also is considering legislation to empower the Food and Drug Administration to regulate tobacco. That could lead to reformulated cigarettes. Mr. Obama, who has agonized over his own cigarette habit, said he would sign such a bill.

Prospects for reducing the harm from smoking are better than they have been in years, said Dr. Timothy Gardner, president of the American Heart Association. The tax increase "is a terrific public health move by the federal government," he said. "Every time that the tax on tobacco goes up, the use of cigarettes goes down."

About one in five adults in the United States smokes cigarettes. That's a gradually dwindling share, though it isn't shrinking fast enough for public health advocates.

The Centers for Disease Control and Prevention says cigarette smoking results in an estimated 443,000 premature deaths each year, and costs the economy $193 billion in health care expenses and lost time from work. Smoking is a major contributor to heart disease, cancer and lung disease.

Public health officials are urging individual doctors and staff at telephone "quit lines" in every state to make the most of the tax increase by reaching out to smokers. But it is unclear how deeply the tax will cut into tobacco consumption.

Eric Lindblom, research director for the Campaign for Tobacco-Free Kids, says he expects a drop of at least 6 percent to 7 percent among young smokers.

Philip Gorham, who tracks the tobacco business for Morningstar, the investment research firm, said he expects an overall drop of 4 percent to 5 percent this year. What happens after that is less certain, especially as the economy recovers.

"I would expect a road bump this year," said Gorham. "But these companies will still be extremely profitable. I still think they will make their return on capital by wide margins in the long run."

Philip Morris USA, the largest tobacco company and maker of Marlboro, is forecasting a drop, but spokesman Bill Phelps said he cannot predict how big. Philip Morris raised Marlboro prices by 71 cents a pack early this month, and prices on smaller brands by 81 cents a pack. Other major companies followed suit.

The pricing moves raised eyebrows. "That's nothing more than greed," said Kevin Altman, an industry consultant who advises small tobacco companies. "They weren't required to charge that until April 1. They are just putting that into their pockets."

Responded Phelps: "We raised our prices in direct response to the federal excise tax increase, and people who are upset about that should find out how their member of Congress voted, and contact him or her."

Some policy analysts have questioned the wisdom of boosting tobacco taxes to finance health care for children. They argue that the fate of such a broad program should not depend on revenues derived from a minority of the adult population, many of whom have low incomes and are hooked on a habit. The tobacco industry is also warning that the steep increase will lead to tax evasion through old-fashioned smuggling or by Internet purchase from abroad.

But smoking control advocates such as Lindblom say tobacco taxes should be even higher. "There's a lot of room to go after cigars and smokeless," he said. "We are certainly hopeful that health care reform will include some more increases."

Standing outside a Washington department store, attorney Margaret Webster, 42, puffed on a Marlboro Ultra Light and lamented the fact that the government is reaching deeper into her pocketbook.

"I don't think we (smokers) like it," she said. "But I've heard so many people say they were going to quit when the price went up ... and they're still smoking."

[diesel_smurf]

Okay is it not our right as AMERICANS to CHOOSE to smoke if we are over the age of 18??? Increasing the taxes on tobacco to try and "save us" from ourselves so maybe we can quit and not get cancer is WRONG! Smoking RELAXES me and I am bipolar, and suffer PTSD, and am NOT MEDICATED, you take my smokes from me and I am gonna EXPLODE!!! You know they make medications so that you can not afford those, and even if you can get them for 4 dollars at wal-mart, you can't afford to go see the doctor to prescribe them! Now you tax tobacco, some of us do NOT want to quit, we actually do ENJOY it. If the government wants to save the USA from dying, then tax all these fast food chains that everyone keeps buying greasy foods from to feed their 1 year old FRENCH FRIES! Obesity is America's problem NOT tobacco!!!! I don't see a single smoker putting a cigarette in a 1 year olds mouth!
Democracy my butt!!! And they wonder why I don't vote.............. CAUSE THEY DON'T CARE WHAT I THINK ANYWAY!!!!!!!!!!!!!

[babooph]

Now for local govt -TAX CHURCH PROPERTY-they are nothing more than private clubs -the "flock" os for fleecing-not the educated public.

[honestabe8]

nolies: as a DoD employee, aren't you a beneficiary of government spending?

[nolies74621]

Why not increase the tax on alcohol?
Posted by tomanyt

Don't worry BHO will raise alcohol taxes. How else will he pay for his socialist spending....Were on our way. Here comrede have half of my sandwich.

CHANGE WE CAN BELIEVE IN?????????????????????????????

[texasbeta]

Plus, during times of extreme stress, like now, smokers are calmed down by smoking; which makes them smoke more. All I can say is watch out non-smokers....a lot of smokers cannot afford to pay the higher prices and are forced to go cold turkey (ever see the old movie "Cold Turkey"?) crime, that is already on the rise, will go up even faster.

Obama needs to reconsider this tax. Try spreading it out a little more and not single out one group of people.
Posted by observer2020

You don't use logic do you? Because smokers quit, crime will go up...why, because they are pissed? Are you 13? Concerning Obama raising taxes...you are just an idiot. You know damned well what the statement was about, and the context...seriously, just a sad pathetic idiot

[rhs648]

Imagine a smoke-free life. How grand that would be. It's a nasty habit.
Posted by avigil2

It sounds like you like to tell other people how they should live.

[rhs648]

Why not increase the tax on alcohol?
Posted by tomanyt

That might anger too many people.

[honestabe8]

Why not increase the tax on alcohol?
Posted by tomanyt

Because the alcohol pushers are a formidable lobbying group and no politician wants to cross them with a tax, or to legalize marijuana (which would cost them millions of dollars in lost sales)

[observer2020]

Obesity costs us 10 times what smoking does.....
Put a 2 dollar tax on a value meal and see how fast Americans flip out.
How about a TAX on HFCS the deadly sweetener made from grain and found in soft drinks? This has been linked to obesity and type 2 Diabetes-- this sickens, cripples and then kills more people than smoking and thus puts a strain on our health care system!

Obama has already broken his promise not to tax people making less than $250,000 per year. In fact, he is increasing taxes for those who make the least money in American society - since they are the majority of smokers. Higher taxes for the poorest people in America.

Plus, during times of extreme stress, like now, smokers are calmed down by smoking; which makes them smoke more. All I can say is watch out non-smokers....a lot of smokers cannot afford to pay the higher prices and are forced to go cold turkey (ever see the old movie "Cold Turkey"?) crime, that is already on the rise, will go up even faster.

Obama needs to reconsider this tax. Try spreading it out a little more and not single out one group of people.

[tomanyt]

Why not increase the tax on alcohol?