Although cigarette taxes are a very effective way to encourage people to stop smoking — as well a potential source of important revenue for some cash-strapped states — a new study suggests that they also work to highlight income inequality among American smokers.
New York places a $4.35 tax on each pack of cigarettes, the highest rate in the country, and researchers used data from the state health department to calculate how much money its residents are spending on cigarettes each year. They found that that smokers in New York who earn less than $30,000 a year spent an average of 23.6 percent of their annual income on cigarettes, while the state’s wealthier smokers — defined as those earning over $60,000 a year — spent an average of just 2.2 percent of their earnings to support their smoking habit.
Because of this discrepancy, researchers pointed out that this tax may be disproportionately straining low-income New Yorkers:
“Although high cigarette taxes are an effective method for reducing cigarette smoking, they can impose a significant financial burden on low-income smokers,” Matthew Farrelly and his co-authors wrote in the conclusion of their paper, which was published this month in Plos One, an online, peer-reviewed journal. […]
The low-income now spend twice as much of their earnings on cigarettes as they did in 2003, when the state imposed a tax of $1.50 [compared to the current $4.35 tax] on each pack.
The researchers concluded that to make the cigarette tax less regressive, the state should spend more of the resulting revenue on programs that help low-income smokers quit the habit, although both the researchers and the health department say this would be a challenge.
The study acknowledged that low-income populations tend to have higher percentages of smokers, highlighted by the fact that smoking rates among low-income New Yorkers did not decline at all between 2003 and 2010, even though smoking rates dropped by about 20 percent among all income groups during the same period. According to 2010 figures from the Centers for Disease Control, 28.9 percent of adults below the poverty level were smokers, a full 10 points higher than the rate for the adult population at or above the poverty level. Anti-smoking advocacy groups have also noted the correlation between smoking and income level, pointing out that encouraging lower-income Americans to quit smoking can help save states money on their Medicaid program expenditures, since approximately 10 to 20 percent of all Medicaid funds — totaling more than $30 billion each year — is spent on costs related to smoking-related illnesses.
But as the researchers noted, states could attempt to combat some of these issues by choosing to use the revenue generated by their cigarette taxes to invest in programs to help lower smoking rates among low-income populations. Turning a smoking habit into a bigger financial investment may deter some smokers, but cigarette taxes only represent one part of a broader public health strategy that should also include preventative education and support programs.