The Tobacco Tax

The benefits of a proposed increase go way beyond funding children's health insurance.

TOBACCO USE is the No. 1 cause of preventable death in the United States, killing more than 400,000 Americans each year. Half of all long-term smokers will die early from a disease caused by tobacco. One answer to this scourge is imposing higher taxes: According to one recent report, increasing tobacco taxes has "proven highly effective in reducing tobacco use."

For every 10 percent increase in tobacco prices, the number of adult smokers drops by 1.5 percent and overall consumption drops 2 percent. Young smokers are much more responsive to price increases than adults, so higher tobacco taxes are particularly effective in preventing youths from moving beyond experimentation to habitual smoking. Pregnant women are similarly affected; a 10 percent price increase produces a 5 to 7 percent reduction in smoking.

This may not be a surprising analysis, but it does come from a somewhat surprising source: the President's Cancer Panel, which endorsed, in its most recent report, an increase in the federal excise tax on tobacco. President Bush has done the opposite; he vetoed an expansion of the State Children's Health Insurance Program (SCHIP) that would be funded by a 61-cents-a-pack increase in the tobacco tax, to $1 per pack. The tax hasn't been increased in nearly a decade.

Mr. Bush argues that the legislation would "raise taxes on working people," and to a certain extent that is accurate. Smoking is more prevalent among those with lower incomes. However, as the President's Cancer Panel noted, while the new tax would fall more heavily on lower-income smokers, "tax increases also result in greater reductions in smoking among this population, with the dual effect of shifting the tax burden to higher-income smokers." This is not some rogue group; its three members, appointed by Mr. Bush, are LaSalle Leffall, professor of surgery at Howard University and chairman of the board of the Susan G. Komen Breast Cancer Foundation; Margaret L. Kripke, executive vice president of the University of Texas M.D. Anderson Cancer Center; and cyclist and cancer survivor Lance Armstrong.

The Campaign for Tobacco-Free Kids estimates that the 61-cents-a pack increase would result in a 9.2 percent decline in youth smoking. Some 1.9 million children alive today would not become smokers, and 1.2 million adult smokers would quit. The administration argues that because tobacco taxes are effective in reducing smoking, the increase would not produce enough to fund SCHIP after the first five years. That's true -- but it's an argument for the tax, not against it.