Posted on Sat, Sep. 04, 2004


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?





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