Tobacco Tax in Michigan “The ultimate conquest of cancer is as much a public policy aspiration as it is a scientific and medical challenge.” – John R Seffrin, PhD, Chief Executive Officer

ACS CAN Proposal Increase the Tobacco Tax in the following ways: – Increase the cigarette tax by $1.50 ($3.50 Total per pack) – Increase the Other Tobacco Products (OTP) Tax to provide parity. (84% Wholesale price, Currently 32%) – Fund Cancer Prevention, Tobacco Prevention and Cardiovascular Health programs

Why increase the tobacco tax? Loss of the sales tax ballot initiative in 2015 Upcoming state budget problems – HICA – Medicaid – Healthy Michigan Plan (Medicaid Expansion) Continued decline in revenue for prevention initiatives – Health and Wellness Initiative, Healthy Michigan Fund Cancer Prevention Program Tobacco Prevention Program Cardiovascular Health Increased use of emerging tobacco products including: – E-Cigarettes – Snuff – Snus

Continued Decline in Funding : HMF invested $41 million per year on prevention programs : Each year the legislature diverted money to balance the state budget reducing the fund to $25 million per year : Millions more raided from the HMF bringing it to $10.9 million : prevention programs suffered yet some more with a reduction to $8 million with $3 million of that misleadingly labeled as “one time funding” : budget proposals diminish HMF to almost nothing.

Cancer Prevention Funding

Tobacco Prevention Funding

Tobacco Tax Effective July 1, 2004 Cigarette tax rate -.10 per (10 cents) individual stick or $2.00 per pack of 20. Other Tobacco Products - Cigars, non-cigarette smoking tobacco and smokeless tobacco tax rate is 32% of the wholesale price which is the price charged by the manufacturer including the federal taxes before any discounts. Effective November 1, 2012 Premium Cigars - Cigars with a wholesale cost of $ or more per individual cigar are taxed at a rate of 50 cents per cigar. Cigars with a wholesale cost less than $ each are taxed at 32% of the wholesale price.

Tobacco Tax Increases Green = 2006 to present Red = 2005 or earlier

Tobacco Taxes from 2001 thru 2014 Data provided by the Michigan Department of Treasury

Tobacco Tax Graph

Where does the money go?

Excise Tax = $926 MillionTobacco Prevention Program = $1.6 Million Master Settlement = $261.3 Million Sales Tax = $360 Million

ACS CAN Proposal Increase the Tobacco Tax in the following ways: – Increase the cigarette tax by $1.50 ($3.50 Total per pack) – Increase the Other Tobacco Products (OTP) Tax to provide parity. (84% Wholesale price, Currently 32%) – Fund Cancer Prevention, Tobacco Prevention and Cardiovascular Health programs

Lets Run the Numbers: Cigarettes and OTP A significant increase in the tax on tobacco products, and subsequently the price, is one of the most effective ways to reduce tobacco use and its associated public health harms and health care costs, while also generating considerable new revenue. The tables on the next slide show, a $1.50 per pack cigarette tax increase in Michigan would bring the state more revenue, public health benefits, and health care cost savings than a $1.00 cigarette tax increase.

Numbers $1.50$1.00 Projected New Annual Revenue from Increasing the Cigarette Tax Rate: $ million $ million Additional Revenue from Raising Other Tobacco Product Tax Rates to Parallel New Levels: $71.40 million $57.40 million

Public Health Effects of an Increase Projected Public Health Benefits for Michigan from the Cigarette Tax Rate Increase Percent decrease in youth smoking:17.3% Youth under age 18 kept from becoming adult smokers:67,300 Current adult smokers who would quit:83,200 Premature smoking-caused deaths prevented:43,000 5-Year reduction in the number of smoking-affected pregnancies and births:14,600 5-Year health care cost savings from fewer smoking-caused lung cancer cases:$14.38 million 5-Year health care cost savings from fewer smoking-affected pregnancies & births:$34.47 million 5-Year health care cost savings from fewer smoking-caused heart attacks & strokes:$33.32 million 5-Year Medicaid program savings for the state:$24.39 million Long-term health care cost savings from adult & youth smoking declines:$2.95 billion

Tobacco Tax and OTP With increasing the tax you will find significant amounts of revenue that can be stable for the next five years. We would project that the annual decline in the tobacco use would be around 5%, but could be less. Reduction at the last increase was on average 2.5% annually. Possibility to gain more revenue if the definition of tobacco was revised.

Prevention Funding Increase funding for the Michigan Cancer Prevention Program and Tobacco Prevention Program. – State funds are needed to promote and implement evidence- based strategies to reduce and prevent cancer. – Well funded tobacco control efforts are needed to reduce the burden of tobacco. – Funding for these programs has decreased significantly over the past 10 years.

Prevention Funding Additional revenue from tax: $ Million Where will the money go? $50 Million – Tobacco Prevention Program, Cancer Prevention Program, Cardiovascular Health Program $ Million – Medicaid?

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