Gov. Mike DeWine earlier this year proposed nearly doubling Ohio’s cigarette tax — from $1.60 a pack to $3.10. It didn’t pass the legislature, but DeWine intended to use the $319 million it was projected to generate to help fund a $1,000 tax credit for families with children under seven.
If it had passed, the measure would have created economic benefits aside from the tax credit that utterly swamped its costs, according to a new analysis by Columbus-based Scioto Analysis.
Mostly by getting adults to stop smoking and stopping teenagers from ever starting, the tax hike would produce $18.9 billion in social benefits over the coming decades, it said. That dwarfs the $816 million in estimated social costs.
The conclusion was based on 10,000 computer simulations of raising the tax, the report said.
“We estimate that a $1.50 cigarette tax increase will cause 71,000 adults to quit smoking, 2,500 teenagers to either quit smoking or never start smoking, and adults who never start smoking to gain 45,000 years of life,” the report said. “The economic value of this mortality risk reduction to adults who will not start smoking is $177 billion. These are estimates of the value of benefits to individuals in the next year, whose health benefits we estimate over the next 68 years for adults and 81 years for teenagers.”
The analysis didn’t include the $177 billion in estimated savings to adults who would never start smoking thanks to the tax in its bottom-line conclusion.
Smoking is one of the leading causes of preventable deaths in the United States. With 15% of the state’s adults smoking, the rate of Ohioans who engage in the harmful activity is well above the national average of 12.1%.
In addition, mortality from health conditions associated with smoking is higher in Ohio than the national average, the report said. The habit also imposes costs on nonsmokers through secondhand smoke, increased health care costs and even fires that would otherwise have been avoided.
Raising taxes on cigarettes aren’t just a way to cover some of those costs, they’re also a way to shape consumer behavior.
“Cigarette taxes are one policy tool available for correcting irrationalities in the market,” the report said, citing studies showing that increased taxes reduce smoking. “If smokers underestimate long-term harm, higher prices can push consumption toward what they would choose with more perfect information.”
The simulations found that the biggest benefits from increased cigarette taxes would accrue from people quitting or never picking up the habit. Altogether, Ohioans would have more than 100,000 years added to their collective lives, the models concluded.
Meanwhile, the economic downsides that were simulated were losses to producers and lost taxes and legitimate sales due to increased smuggling from states where smokes are cheaper.
One potential social cost the analysis didn’t appear to examine was the impact of cigarette taxes on families of people who would continue smoking.
According to the anti-smoking nonprofit Truth Initiative, 72% of smokers are from low-income communities. So most of those who aren’t able to overcome their nicotine addiction live in households least able to afford more taxes.
This story is republished from the Ohio Capital Journal. View the original article.
