Cigarette Tax

Background on the Issue

(or you can go straight to Sample Arguments Against and In Favor)

The cigarette tax was adopted in Massachusetts in 1939. There have been numerous campaigns over the years to continue or enhance this revenue stream. For example, in 1992, the Question 1 ballot initiative created the Massachusetts Tobacco Control Program and raised the state cigarette tax by $0.25, from $0.26 to $0.51 a pack.

The Commonwealth last raised the cigarette tax, by $0.75, in 2002. In 2005, a smaller tax increase on cigarettes was defeated because of strong opposition from then Governor Romney and Senate President Travaglini. A proposal to increase the tax by $1.00 per pack failed in 2007.

Currently the total retail price for a pack of cigarettes is between $4.50 and $5.50. This includes a state tax rate of $1.51 per pack of cigarettes, which means that Massachusetts has the 15th highest in the nation.

Nonetheless, Massachusetts ranks 23rd among the states in share of personal income collected from tobacco taxes. It collected approximately $424 million in all tobacco taxes (including cigarettes) in fiscal year 2005. This represents 1.5 percent of total state and local taxes collected.

On February 12, 2008, Speaker of the House, Sal DiMasi, announced an outline for his budget plan to deal with the structural deficit facing Massachusetts. Included in the plan is a $1.00 per pack tax increase on cigarettes. It is estimated that this would generate $152 million a year. This new revenue would be used to offset rising healthcare costs due to the reform bill passed 2006.

The Governor’s budget, released in January 2008, included a related proposal for enhanced revenue enforcement. The efforts listed include better cigarette tax stamps (tax stamps are currently being forged by many businesses) and other improvements in tobacco tax collection.

The Massachusetts House of Representatives enacted a $1 per pack cigarette tax increase, which will generate about $175 million next fiscal year. This is higher than the original estimation because an amendment to the bill bumped the effective date up six months sooner than the proposal. The cigarette tax increase was part of a larger tax reform bill and passed, by a vote of 131-23, on April 11, 2008.

This is the first major tax vote for the House since 2002. The Senate must now take up the issue and pass their version of the bill. You can read more about what happened with the vote here.

On April 16, 2008, the House Ways and Means budget for fiscal year 2009 was released. It includes several tax enforcement and efficiencies as originally proposed by the Governor, which would result in $166.1 million in revenue. These changes include: modifications in cigarette tax collections, extending the tax to cigars, additional auditors, wage enforcement, and more. 

 

Sample Arguments Against

  • Increased taxes would reduce income for small businesses, a vital sector of our economy.
  • Reducing income for businesses threatens jobs and job-creation.
  • People with lower incomes have disproportionate smoking rates and therefore will be disproportionately impacted by the cigarette tax.
  • Massachusetts’ tax on cigarettes is already one of the highest in the nation.
  • The price for a pack of cigarettes in Massachusetts is 11th highest in the nation.

For more information see:

New England Convenience Store Association
The Tax Foundation


Sample Arguements In Favor

  • Cigarette tax increases can quickly restore state tobacco tax revenues to historical levels or higher – while also reducing state smoking levels and related costs and saving lives.
  • As time passes, inflation erodes the real value of state tobacco tax rates and revenues; this also means that the taxes account for increasingly small portions of the total retail price of a pack of cigarettes.
  • According to the CDC, each pack of cigarettes sold in Massachusetts results in $19.49 in public healthcare costs.
  • An MIT study found that every dollar invested in tobacco control can save $2 to $3 dollars in health care costs.
  • Public support is strong: A 2005 survey of Massachusetts residents found 70% favored increasing the cigarette tax. Even more impressive, 72% of voters with family incomes less than $30,000 support a tax increase (State House News Service).
  • Though they are not smokers themselves, an estimated 1,000 or more Massachusetts adults and children die each year from secondhand smoke.
  • Tobacco kills more people each year than car accidents, AIDS, homicides, suicides and poisonings combined.

For more information see:

Tobacco Free Mass
Health Care for All
Campaign for Tobacco-Free Kids