a significant cigarette tax rate increase in kansas would produce a large, sustained increase in...
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A Significant Cigarette Tax Rate Increase in Kansas Would
Produce a Large, Sustained Increase in State Tobacco Tax
RevenuesFrank J. Chaloupka, Distinguished Professor, Department of Economics
Director, Health Policy Center, University of Illinois at Chicago
March 5, 2015
Cigarette and other tobacco tax
increases lead to significant
reductions in tobacco use and its
health and economic consequences
Cigarette Tax Revenue Economic Report Frank J. Chaloupka
Cigarette Prices and Cigarette SalesKansas, 1966-2013, Inflation Adjusted
Sources: Tax Burden on Tobacco, 2014; Bureau of Labor Statistics; and Authors’ Calculations
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
115
135
155
175
195
215
235
255
275
295
315
Price Sales (million packs)
Pri
ce
pe
r P
ac
k (
Ja
n 2
01
5 d
oll
ars
)
Sa
les
(m
illi
on
pa
ck
s)
Cigarette Tax Revenue Economic Report Frank J. Chaloupka
Cigarette Prices and Adult SmokingKansas, 1995-2010, Inflation Adjusted
Sources: Behavioral Risk Factor Surveillance System; Tax Burden on Tobacco, 2013; Bureau of Labor Statistics; and Authors’ Calculations
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010$2.25
$2.75
$3.25
$3.75
$4.25
$4.75
$5.25
16.8
17.8
18.8
19.8
20.8
21.8
22.8
Price per Pack Adult Prevalence
Pri
ce
pe
r P
ac
k (
Ja
n.
20
15
Do
lla
rs)
Ad
ult
Pre
va
len
ce
Cigarette Tax Revenue Economic Report Frank J. Chaloupka
Cigarette Prices and Youth SmokingKansas, 2005-2013, Inflation Adjusted
Sources: Youth Risk Behavior Survey; Tax Burden on Tobacco, 2013; Bureau of Labor Statistics; and Authors’ Calculations
2005 2006 2007 2008 2009 2010 2011 2012 2013$4.40
$4.50
$4.60
$4.70
$4.80
$4.90
$5.00
$5.10
$5.20
$5.30
10
12
14
16
18
20
Price per Pack Youth Prevalence
Pri
ce
pe
r P
ac
k (
Ja
n 2
01
5 d
oll
ars
)
Yo
uth
Pre
va
len
ce
Cigarette and other tobacco tax
revenues are much more
predictable and stable than many
other state revenues
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$0
$100
$200
$300
$400
$500
$600
$700
Tax Revenues (millions) Tax Rate
Tax
Per
Pac
kT
ax Reven
ues (m
illion
s)
Cigarette Tax and Tax RevenuesWisconsin, 1965-2014
Sources: Tax Burden on Tobacco, 2013, and Authors’ Calculations
Cigarette Tax and Tax RevenuesArizona, 1965-2014
Sources: Tax Burden on Tobacco, 2013, and Authors’ Calculations
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$0
$100
$200
$300
$400
Tax Revenues (millions) Tax Rate
Tax
Per
Pac
kT
ax Reven
ues (m
illion
s)
Kansas’ Past Experiencewith Cigarette Tax
Increases
Cigarette Tax and Tax RevenuesKansas, 1965-2014
Sources: Tax Burden on Tobacco, 2014, and Authors’ Calculations
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
$0.00
$0.50
$1.00
$1.50
$2.00
$0
$20
$40
$60
$80
$100
$120
$140
Tax Revenues (millions) Tax Rate
Tax
Per
Pac
kT
ax Reven
ues (m
illion
s)
Cigarette Tax and Tax RevenuesFlorida, 1965-2014
Sources: Tax Burden on Tobacco, 2013, and Authors’ Calculations
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$0
$300
$600
$900
$1,200
Tax Revenues (millions) Tax Rate
Tax
Per
Pac
kT
ax Reven
ues (m
illion
s)
Cigarette Tax and Tax RevenuesKansas & Neighboring States, FY2002 & FY2004
Sources: Tax Burden on Tobacco, 2013
Kansas Nebraska Iowa Missouri Oklahoma Colorado$0
$50
$100
FY 2002 FY 2004
Ne
t C
iga
rett
e T
ax
Re
ve
nu
es
(in
mil
lio
ns
)
NE also Increased
its tax during
this period
+151%
+56%
-1%
+8%
-1% -5%
Cigarette Tax and Tax RevenuesMissouri & Neighboring States, FY2002 & FY2004
Notes: Tax increases include: KS, 24 to 79 cents/pack; NE, 34 to 64 cents/pack; TN, 13 to 20 cents/pack; AR, 34 to 59 cents/pack; and IL 58 to 98 cents/pack. Source: Tax Burden on Tobacco, 2013
Kansas Nebraska Tennessee Arkansas Illinois Missouri$0
$100
$200
$300
$400
$500
$600
$700
FY 2002 FY 2004
Ne
t C
iga
rett
e T
ax
Re
ve
nu
e (
in m
illi
on
s)
+151%
+56%
+46%+67%
+57%
+8%
What Could Kansas Expect From a Tobacco Tax
Increase
Estimated Future Cigarette Tax Revenues Kansas
Sources: Tax Burden on Tobacco, 2013 and Authors’ Calculations
2005 2006 2007 2008 2009 2010 2011 2012 2013 Est. 2014
Est. 2015
Est. 2016
Est. 2017
Est. 2018
Est. 2019
Est. 2020
$0
$20
$40
$60
$80
$100
$120
$140
$160
Without Increase With $1.50 Increase
Note: Data are for fiscal years ending June 30.
Ciga
rett
e Ta
x Re
venu
es (m
illio
ns)
Smoking declines produce enormous public
benefits. A $1.50 per pack cigarette tax
increase in Kansas will:
• Prevent 25,400 youth from becoming smokers
• Encourage 25,800 adult smokers to quit
• Prevent 14,900 future deaths from smoking
• Save $1.0 billion in future health care costs
Kansas can implement other strategies to
increase revenues:
• Regularly increase tobacco tax rates
• Tax other tobacco products rates at equivalent rates
• Implement initiatives such as high-tech tax stamps to
prevent cigarette smuggling and other tax evasion