Tuesday, March 1, 2011

Lance Armstrong has it right: Why tobacco taxes matter

News came out this week that Lance Armstrong will team up with a new partner - the California Cancer Research Act. The Act proposes increasing the state's tobacco tax by $1 and funneling that money toward cancer research. California is facing a budget crisis and may be cutting huge (billions) sums of money from health care funds. California was one of the states at the front edge of reducing tobacco use through community-wide campaigns and tax measures. We don't know how it will play out, but the proposal has the potential to improve health in the state in two different ways. First, tobacco taxes reduce consumption. Second, by putting the revenue gained toward cancer research, the monies go toward prevention and treatment of smoking's leading health outcomes.

Research has shown time and again that increasing taxes reduces consumption of tobacco, particularly among those in younger age groups. In fact, the World Health Organization has called taxation the single most effective method for reducing the demand for tobacco products. After previously increasing taxes and funneling money toward cessation programs, California saw a 16 percent per capita decline in cigarette consumption. In part, this is because youth are highly sensitive to price changes and the higher cost deters many from taking up smoking. Basically, they have trouble coming with the extra cash.

Proponents of the legislation have offered another benefit of the tax - jobs creation. With state universities facing major budget shortfalls, the revenue being directed toward research could create jobs.

Exactly where the money would wind up is always a little unclear, however.  Despite the best of intentions, politicians have ways of directing tobacco money away from intended programs, as we learned when the tobacco companies settled with the states in 1998.  From a health standpoint, though, the money raised from the tax would almost be secondary; the real payoff would be the drop in smoking rates.  And if the lure of extra state revenue gets the new tax on the books, so much the better for everyone. 

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