The Case for a Cigarette Tax, in One Graphic Ezra Klein Washington Post- June 20, 2013 Presented by Tibu Thomas a-cigarette-tax-in-one-graphichttp:// a-cigarette-tax-in-one-graphic/ Accessed on Sep 22, 2013

Budget-2014 The President’s new budget proposal of a 94-cent-a-pack hike on federal cigarette taxes in 2014 to fund early childhood education programs increases the federal tax on cigarettes from $1.01 a pack to $1.95. The new cigarette tax would raise an estimated $78 billion over the next decade, and would reduce smoking due to high prices. The Congressional Budget Office says the health improvement from decreased smoking would save the government millions of dollars over 10 years and generate additional revenue through increased earnings for healthier workers.

Smoking Related Deaths The adverse health effects from cigarette smoking account for more than 440,000 deaths, (one in every five deaths), each year in the U.S. More deaths are caused each year by tobacco use than by HIV, illegal drug use, alcohol use, motor vehicle injuries, suicides, and murders combined. Smoking causes an estimated 90% of all lung cancer deaths in men and 80% of all lung cancer deaths in women. Source: CDC, Annual Deaths Attributable to Cigarette Smoking—United States, 2000–2004CDC

Cigarette Taxes Cigarette taxes are a proven strategy to reduce smoking - especially among younger people - and extend lives (four in five adult smokers started before they were 18). A 10 percent rise in cigarette prices will reduce smoking by 5-15 percent among people under age 18 and by 3-7 percent among adults. Source: Center on Budget and Policy Priorities cbpp.org.cbpp.org.

The link between cigarette prices and peoples behavior is often described by “elasticity.” Data Source: CBOCBO Elasticity Price 1 % P a P b S b S a 0.3% Smokers Congressional Budget Office’s Estimate

Life Expectancy in 2013, by Smoking Status

Increase in Population Number of Additional People ,000 50,000 60,000 10,000 20,000 30,000 40,000 0 All Adults 65 or Older 18 to 64 Years Old Increase in Population Due to the Policy Data Source: CBO.

Health-Related Effects Percentage of GDP Total Effects on Revenues from Improvements in Health Effects of Changes in Labor Earnings per Capita Effects of Increased Longevity Effects of Lower Health Insurance Premiums Net Effects on the Deficit from Improvements in Health Health-Related Effects Due to the Policy Data Source: CBO.

Summary/Discussion The adverse health effects from smoking accounts for one in every five deaths in a given year in the U.S. Tobacco taxes are a proven strategy to reduce smoking, especially among younger people. Health improvement from decreased smoking would save the government millions of dollars over 10 years and generate additional revenue through increased earnings for healthier workers and tax increase. Discussion: Some opponents argue that raising tobacco taxes would unfairly affect low-income people since they have higher smoking rates. But some argue that low-income people would benefit more from the health improvements from cutting consumption.

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