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State Cigarette Taxes Not Spent on Anti-Smoking Efforts
Date:4/8/2010

C report in the same issue found that cigarette minimum price laws -- another way of keeping cigarette prices high -- is also effective in getting people to quit.

In 2009, 24 states and the District of Columbia had minimum price laws, but just seven of them also outlawed the use of trade discounts in calculating the minimum price of cigarettes.

Cigarette makers give trade discounts to dealers in an attempt to circumvent increases in excise taxes and keep cigarette costs down, Pechacek said.

"There are many ways in which the industry can blunt the effect of excise tax increases, and the 10 states with the lowest excise taxes had an absence of any legal protections against discounting and other price cutting mechanisms," he said.

Of the 10 states with the highest excise taxes, eight also have minimum price laws, Pechacek noted.

"The ultimate thing is to have the public health benefit of the high prices," he said. "While we are making progress, the industry is responding by having dramatic efforts in discounting and other types of value-added efforts to blunt the effect of the public health goal of having a higher retail price."

In a press statement released Thursday, American Heart Association CEO Nancy Brown said her group, "applauds states that have raised their tobacco taxes and urges those that lag behind to take corrective action. While we urge all states to raise their tobacco taxes, we would especially encourage the 30 states and territories that currently have a cigarette tax below $1.50 per pack to consider the benefits of a cigarette tax increase of at least $1.00 per pack."

Philip Morris, the largest U.S. tobacco company and the only one to support legislation allowing the U.S. Food and Drug Administration to regulate tobacco, firmly opposes raising excise taxes on cigarettes, according to information on the company's Web site.

The company claims the tax is regressive, taxing
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