Study discredits
another excuse for low cigarette tax
SCRATCH ANOTHER item off the list of reasons S.C. lawmakers give
for not discouraging teen smoking by raising our rock-bottom
cigarette tax rate.
The S.C. Cancer Society, not convinced by arguments that a higher
cigarette tax would drive smokers over the border to purchase
cheaper smokes in North Carolina or Georgia, decided to take a look
at what has happened since Georgia increased its tax from 12 cents
to 37 cents a pack last summer.
What it found was that cigarette tax collections in Georgia more
than doubled. That means that while cigarette sales dropped (had
they remained constant, tax collections would have tripled), the
state government hasn’t lost any money by raising the tax rate, as
some contend would happen in South Carolina.
But tax collections aren’t the only concern of cigarette tax
critics; they also worry merchants would lose sales if smokers cross
the border in droves to avoid a higher tax. To put that concern to
rest, the Cancer Society examined South Carolina tax collections for
the same time, and found they had actually dropped slightly since
Georgia raised its tax to five times the S.C. rate.
The drop was less than 2 percent, and it was in keeping with a
trend that started before Georgia raised its tax; but it clearly
demonstrates that unless South Carolinians have suddenly kicked the
habit in massive numbers (which, unfortunately, we have no reason to
believe has happened), very few Georgians are leaving the state to
buy cigarettes where the tax is lower.
That suggests that Georgians’ are smoking less since the tax was
increased. And while that might hurt merchants, it’s hard to see why
this would upset legislators who care about the public as a whole,
since 70 percent of smokers say they want to quit, and since
smoking-caused illnesses are a major reason for the skyrocketing
costs of insurance and public health programs.
Moreover, if Georgia is like every other state that has increased
its cigarette tax, much of that reduction is the result of kids
being priced out of the market or not taking up smoking to begin
with because it costs too much. And for many people — including this
editorial board — that has always been the primary reason to raise
the cigarette tax.
The study results track those from a study prepared last year for
the Tobacco Technical Assistance Consortium at Emory University,
which found that while smoking had declined and cross-border sales
had increased in states that raised cigarette taxes, total tax
collections have increased dramatically. It determined that sales
would have to decline by 85 percent for a state to actually lose
money by raising the cigarette tax by 70 cents (which, in South
Carolina, would still be below the national average). And it
projected that if South Carolina raised its tax by 70 cents a pack,
we would lose just 6 percent of cigarette sales to other states, but
increase tax collections from $30 million to $230 million a
year.
We already know that raising the cigarette tax will reduce teen
and, to a lesser extent, adult smoking. We know that this will begin
to erode the $854 million cost we pay every year to treat the
smoking-induced illnesses of their fellow South Carolinians.
Together, these tax studies clearly demonstrate that the state would
not lose any money, and merchants would be affected only marginally,
with a higher cigarette tax. All of this raises the question: Who
are legislators protecting when they refuse to raise the cigarette
tax? |