The Center on Budget and Policy Priorities released a report Tuesday outlining the dual benefits that an increased tobacco tax would have for our country. The tax, proposed by the President to help finance early learning programs, would have the favorable side-effect of boosting public health.
A 94-cent tax hike on tobacco products is predicted to yield $78 billion over ten years, which would be invested in expanding access to and enhancing the quality of early learning programs. Such a substantial investment in early learning will undoubtedly benefit our youngest children. Moreover, the tax would afford our nation remarkable health gains.
The health risks incurred by tobacco products are universally acknowledged, with the Centers for Disease Control and Prevention [PDF] citing cigarette smoking as the cause for 20% of all deaths in the United States. The report confirms that tobacco taxes are “a highly effective control strategy” in reducing consumption and subsequently extending lives. The research is particularly compelling when focusing exclusively on teenagers and low-income individuals, who are more likely to be deterred by higher prices.
The Congressional Budget Office (CBO) [PDF] estimates that a $1-per-pack increase (similar to the increase the President’s has proposed) would lead to an 8% decline in smokers aged 18 to 24 and a 6% decline in adult smokers by 2021. Such notable declines would give rise to a tremendous advancement in public health.
The report refutes the argument that a tobacco tax increase would be regressive, citing a study examining the impact of the 2009 tobacco tax increase on low-income individuals: those living below the poverty line paid 11.9% of the tax increase, but received 46.3% of the resulting health benefits. These numbers reflect the fact that poorer individuals are more sensitive to price increases and are therefore more likely to smoke less, quit, or avoid starting altogether in response to a tax hike.
The President’s proposal offers our nation enormous advancements in two distinct areas through a single policy. The report sums up the policy as beneficial to society at both the “front end” and the “back end”: the additional revenue to early learning programs enhances opportunities for young children, and the decline in tobacco use improves health and extends lives. The benefits of Obama’s increased tobacco tax come full circle.