TOBACCO TAX Jill Collins, Julia Hecht, Lorraine Lick, & Dawn Magee

P ROBLEM I DENTIFICATION  Kansas budget shortfall estimation after one billion dollars in budget cuts:  $500 million dollars (Shields, 2010, in press)  Recession recovery period  Historically: state governments in the past have raised cigarette and tobacco taxes to increase state revenue.  January: Cigarette and Tobacco Tax hike Proposed

B ACKGROUND Social Families working with fewer resources Further stressing lower socio-economic population Reduction in youth smoking Decrease in Kansas residents who consume tobacco products (youth, elderly, low income residents)

B ACK G ROUND Economic Tobacco related healthcare costs = $927 million annually State Medicaid expenditures = almost $200 million annually Benefits tobacco tax = potential decrease in healthcare costs with accumulated long term savings Increased financial burden on families = either decreased number of smokers or increased incidence of alternative ways of acquiring tobacco

B ACK G ROUND Ethical Improved health and decrease healthcare costs Targeting “mom-and-pop” owned stores Targeting lower income families

BACKGROUND Legal & Political Factors March 2010 – Senate Tax Committee reviewed legislation and addressed SB 516 which would increase tobacco tax 55 cents per pack National average of tobacco products and retail sales tax is $1.34 Kansas Governor Mark Parkinson State of the State Address 2010 – supported enacting public smoking ban, raising cigarette & tobacco taxes to reduce teen smoking and in order to generate revenue

B ACKGROUND Legal & Political Factors Advocates improves health & safety of population Tobacco industry accountability for illnesses and deaths Prevents youth from smoking Generates revenue to help subsidize healthcare Helps develop education programs that can reduce number of Kansas smokers

B ACK G ROUND Legal & Political Factors Critics Infringes on personal freedom Discriminatory – unfairly targets smokers, industries, and the poor Potential for increased crime – smuggling over borders and access via internet/mail order

I SSUE S TATEMENT Should the state government increase tobacco taxes to resolve Kansas revenue deficits?

S TAKEHOLDERS Insurance Providers Healthcare Professionals Employee agencies providing health insurance Governmental agencies Tobacco farmers Tobacco industries Consumers Small business owners

P OLICY O BJECTIVES 3 benefits of raising tobacco taxes in Kansas Additional monies added to state coffers Decreased number of smokers Reduced healthcare costs of treating tobacco related illnesses

A LTERNATIVES Do Nothing/Status Quo Option Continue with tax cuts and planned cigarette and tobacco tax hikes Combined Change Option: Shift the burden of a tax increase from solely tobacco products to include other products and current existing taxes that share burden of higher taxes with other all income bracket groups Responsibility Option: 1998 Kansas awarded portion of Master Settlement Agreement from 4 main tobacco companies – Currently state is pending less than 10% recommended by CDC on prevention programs.

E VALUATION C RITERIA 1. Cost 2. Benefits 3. Effectiveness 4. Political Feasibility

A NALYSIS OF P OLICY A LTERNATIVES Each policy alternative was evaluated utilizing the evaluation criteria outlined in the previous slide Cost Benefits Effectiveness Political Feasibility Pros and Cons were identified and the following table was drawn up to compare the options in an easy to read format.

C OMPARISON OF P OLICY A LTERNATIVES Alternative 1Alternative 2Alternative 3 Do Nothing/Status Quo Option Combined Change Option Responsibility Option Criteria Cost -+++ Benefits -+++ Effectiveness -+/-++ Political Feasibility -+/-+ Score for Alternative -427

S UMMARY /R ECOMMENDED P OLICY Doing Nothing/Status Quo clearly not an option continuation with this option will result in higher deficits and further budget cuts in key community areas Combined Option appears logical, however, there is questionable effectiveness with potentially alternatives of acquiring products in a competitive market with easy access to several states Responsibility Option most logical with highest comparison scores with funds that are already in existence.

R EFERENCES Americans for Prosperity. (2010, April, 6). The economic impact of cigarette tax increases in Kansas. AFP Kansas Newsroom. Retrieved from forprosperity.org/ economic-impact-cigarette-tax-increases-kansas Convenience Store News (2010, March, 17). Senate passes PACT Act. Retrieved March 29, 2010, from article_display. jsp?vnu_content_id= Executive Summary (2009, December, 9). Campaign for tobacco free kids. Retrieved from Gever, M. (2007, August, 6) Tobacco tax increases: Pros and cons. Retrieved from Governor of the State of Kansas: Mark Parkinson (2010, January, 11). State of the State [Press Release]. Retrieved from state-of-the-state-address. Kansas Department of Health and Environment. (2007). Tobacco use in Kansas: 2007 status report. Retrieved from Kansas Department of Revenue. (2008). Annual report. Retrieved from org/pdf/forms/08arcomplete.pdf Kansas Department of Revenue. (2010). Kansas cigarette and tobacco products act: KSA chapter 79, article 33. Retrieved from Mason, D., Leavitt, J., & Chaffee, M. (2007). Policy and politics in nursing and healthcare. St. Louis: SaudersElsevier.