Tobacco tax increase takes aim at smokers’ health costs

by Kerry Drake
— June 3, 2014

Without much attention, a major tax increase aimed at reducing the number of smokers in Wyoming is moving full-speed ahead.

The Joint Interim Labor, Health and Social Services Committee is drafting a bill that would raise the state’s cigarette tax, now 60 cents per pack, to $1.85 per pack.

It’s pretty predictable how Wyoming smokers will react to the idea of suddenly having to pay $1.25 more a pack if the measure is approved by the Legislature. Lower-income smokers who already spend a disproportionately high amount of their income on cigarettes will be very vocal opponents, but they will also be the ones most likely to quit smoking because of the expense.

Of course, that’s the idea. The Campaign for Tobacco-Free Kids and the Wyoming Cancer Action Network came to the Labor committee armed with an impressive list of potential benefits due to a higher tax, starting with estimates the increase would annually generate more than $24 million in new revenue for the state.

But it’s the health benefits of having fewer smokers that is the key public policy point made by proponents of the tax hike. The annual health care expenditures in Wyoming directly caused by tobacco use is estimated at $258 million. It’s costing the Medicaid program alone $37 million per year.

When smoking-caused health care costs and the loss of productivity in the state are tallied, it amounts to $12.22 per pack. That’s a figure society simply can’t sustain, and the main solution that’s proven successful throughout the nation during the past 15 years is higher state tobacco taxes.

Based on what’s transpired in other states when there has been a substantial increase in tobacco taxes, this is what is expected to happen in Wyoming:

— A 17.7 percent decrease in youth smoking.

— 5,000 youth under age 18 will be kept from becoming adult smokers.

— 5,000 current adult smokers will quit.

— 2,800 premature smoking-caused deaths will be prevented.

Until 2003, Wyoming’s tobacco tax was only 12 cents a pack. Only four other states, all major tobacco producers, had lower tax rates on the product.

That year the Legislature increased the tax to the current 60 cents per pack, which wasn’t an easy sell to lawmakers or the public. The emphasis then was raising revenue to operate state government, and helping make up expected deficits to the state budget over the next couple years.

The Senate, which passed the increase 20-10, defeated an amendment 11 years ago that would have set aside 10 percent of the tax revenue for local governments. “We are still in significant need of this money in order to address some of these issues you are going to see … in the biennial budget,” said then-Sen. Irene Devin (R-Laramie). Others argued that cities, towns and counties would still receive a sizable amount of tax revenue.

This year’s Legislature had a surplus of approximately $200 million to spend after Gov. Matt Mead’s budget recommendations, but it’s difficult to predict what the state’s fiscal picture will look like when lawmakers reconvene next January. Of course, much will depend on what happens with energy production in Wyoming and the corresponding tax revenues.

Even though Wyoming could certainly use an extra $24 million a year in revenue, the proposed tax increase will likely pass or fail based on the Legislature’s reaction to the argument that the health benefits and reduced costs alone make the bill a no-brainer.

About 700 adults in the state die each year from their own smoking. Six hundred Wyoming children have lost at least one parent to smoking-caused deaths.

Young smokers are an important part of the debate on the issue. About 22 percent of high school students in Wyoming smoke, with boys at a slightly higher rate. Nationally, the rate is 18 percent.

Another 22 percent of male students in Wyoming use smokeless tobacco; the national average is under 13 percent. With limited incomes, many teen smokers will be forced to give up these habits, and many more won’t ever start.

Still, passing a $1.25 increase will be an uphill battle. Bills that raised the tobacco tax by $1 a pack failed the past two years in the Legislature. In 2013, the proposed bill was killed on a 22-29 vote. At this year’s budget session when it needed two-thirds support just to be introduced, it failed by a 2-to-1 margin to get even a simple majority.

Some supporters might wonder why the two groups campaigning for the hike didn’t try for a smaller amount, or at least try to phase-in the larger amount over a few years. But Jason Mincer, Wyoming government relations director for the Cancer Action Network, said efforts in other states have shown “you need a substantial increase (in the price) to see a decrease in smoking.”

“Essentially, we’re trying to do three things with this increase,” Mincer explained. “We’re trying to reduce consumption, reduce smoking-related illnesses, and cut the amount of money the state must spend on treating smokers.”

Reaching those goals, he said, is dependent on increasing the cost of buying a pack of cigarettes enough to get people to quit smoking.

Mincer said he expects to see supporters mount a much tougher lobbying effort for the Labor, Health and Social Services Committee bill in 2015. “We’re really going to go after it,” he vowed.

One thing we won’t be seeing is any type of effort to ban smoking statewide. Such a bill was soundly defeated five years ago, largely due to a revolt by smokers who sent a huge amount of emails, letters and messages to their lawmakers against the plan.

“We won’t be bringing that back any time soon,” Mincer said. The anti-smoking movement in the state now seems firmly committed to the idea of working to pass city and county ordinances that ban smoking in public places. The Casper City Council approved such a ban in 2013, but the next year — with many new members who were elected to lift the ban — the council amended it to allow smoking in bars and taverns. Only about a half-dozen establishments took them up on it, so Casper remains largely smoke-free.

I’m sympathetic to smokers who will be angered by the effort to tax them out of the habit. Smoking is an addiction, and the people who have it can’t easily stop, and even if they do, it’s difficult not to go back to it. Faced with the monetary decision to eat or smoke, many already cut down their food intake to the bare minimum so they can have enough money left to smoke.

I’m no fan of punishing people for their addictions, because treatment is the best solution. But like alcohol, tobacco is a legal product, and for many the only way to get them to stop craving nicotine is to make it so expensive they are forced to quit. It’s definitely a tough-love answer, but the good news is that after they stop smoking, their lives and health will be greatly improved.

The tax increase does nothing to offer a disincentive to those who can easily afford to pay the extra state tax. Anti-smoking coalitions will have to come up with something else to persuade this segment of the population to quit.

I suspect $1.25 will be too much for lawmakers to approve at once; it would make Wyoming go from the 10th lowest tobacco tax in the nation to the highest in this region. Montana and Utah now both tax tobacco at $1.75 per pack.

But I think an increase is in order, and the higher supporters shoot for, the more health and financial benefits will accrue for Wyoming. It’s also hard to argue that increasing the tax is unfair, given that citizens’ state and federal taxes to cover smoking-caused government costs is $130.5 million, or $587 per household.

The bottom line is that for our collective health, the number of smokers needs to decrease. If making tobacco too expensive for some to buy is the most effective answer, it’s the one we need to use.

— Veteran Wyoming journalist Kerry Drake is a contributor to WyoHistory.org. He also moderates the WyPols blog.

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