Cigarette tax increase takes effect Monday
Thousands of people in Wisconsin are expected to quit or reduce their smoking over the next year because of an 18-cents-per-pack increase in the state's cigarette tax.
But the state is still expecting enough new revenue to launch a major prescription drug benefit plan for senior citizens.
"Raising the price does decrease consumption," said Dr. Patrick Remington, a UW-Madison professor specializing in preventative medicine and public health. "Smokers smoke less. Some quit. And some kids don't start."
Effective tomorrow, Wisconsin's tax on cigarettes increases from 59 cents to 77 cents per pack - giving Wisconsin the highest cigarette tax in the region and the ninth highest in the nation.
Wholesalers pay the extra cost, which they pass on to retailers, who pass the cost on to consumers, industry officials said.
The state Legislature and Republican Gov. Scott McCallum approved the increase as part of the state budget McCallum signed last month. The estimated $70 million a year in extra revenue raised by the tax will help pay for a prescription drug program for people 65 and older.
Remington and other smoking opponents say the tax should be increased even more to further reduce smoking and save lives. They also think more of the tax revenue should be used for anti-smoking advertisements and cessation programs.
But critics of the higher tax say it hurts convenience stores near the borders of Minnesota, Iowa and Illinois, which have lower cigarette taxes.
Wisconsin's 18-cents-per-pack increase also unfairly burdens poor people, critics contend.
"It's unfair to tax one small group of consumers to pay for programs that are going to pay for everyone," said Tom Ryan, a spokesman for Phillip Morris USA in New York.
Ryan agreed it's possible that the higher cost of cigarettes in Wisconsin will dent smoking sales. It's also possible, however, that more Wisconsin smokers will buy cigarettes over the Internet to avoid paying the higher tax, he said.
Ryan also questioned the wisdom of state officials who profess to want to reduce smoking yet increasingly rely on tobacco tax revenue to balance the state budget.
"It's an unreliable tax, so possibly the expected revenue won't be reached," he said.
While that's true, state officials say they'll launch the $78 million-a-year SeniorCare prescription drug plan for people 65 and older on Sept. 1, 2002, regardless of cigarette tax collections.
Tobacco Outlet Plus, with three shops in Madison and one in Middleton, was selling Marlboro cigarettes for $3.89 a pack on Friday. A store clerk didn't know if the price reflected tomorrow's tax hike. A company spokesperson could not be reached for comment.
Remington helped with a massive study 10 years ago that analyzed state tax increases and subsequent cigarette sales in all 50 states over 50 years. Remington and others found that a 10 percent increase in the tax produced, on average, a 5 percent decline in cigarette consumption.
Remington said about 1 million people in Wisconsin smoke, including roughly 100,000 kids who are more sensitive to price increases than adults.
Remington said the work of the Wisconsin Tobacco Control Board, a state-funded group that combats smoking with television advertisements, cessation programs and community organizing, is important. But nothing combats smoking as well as a significant tax hike, he added. Canada dramatically reduced its youth smoking 10 years ago by increasing its tax by more than $2, he said.
"Raising the price of cigarettes is a good dose of preventative medicine," Remington said. "Eighteen cents is half as good as 36 cents, which is half as good as 72 cents."