Consequences of Excessive Tobacco Taxes

Not only is more than enough money already available to properly finance tobacco control, further increases in tobacco excise taxes could result in negative consequences.

Higher cigarette taxes encourage some smokers to adopt tax-avoidance behaviors, resulting in lower than expected revenue to the states, lower MSA payments and poor enforcement of minimum-age sales laws. Comprehensive education and enforcement of existing laws are the most effective methods to reduce levels of illegal smoking by minors.

High tobacco excise taxes encourage cross-border smuggling and illegal sales. They also encourage smokers to seek alternative sources, such as the Internet, to purchase their cigarettes, which leads to decreased state tax revenues.

Experts estimate that online sales of cigarettes comprise about 15 percent of total cigarette sales nationwide (about $5 billion annually). And the number of online cigarette retailers operating in the U.S. has grown to nearly 1000.

Higher cigarette taxes equal increased Internet sales, which equal lost tax revenue for the states - more than $1 billion a year,, according to the U.S. Bureau of Alcohol, Tobacco and Firearms (ATF).

High cigarette taxes encourage some consumers to turn to the black market. And, smugglers are eager to supply the product, since they stand to make about $2 million on a truckload of bootlegged cigarettes.

Retailers and wholesalers have watched sales decline as cigarette prices have increased. Since 1998, the average price of a pack of cigarettes has nearly doubled (from $2.04 to $4.05). For more information on how excessive tobacco excise taxes affect businesses, visit the Business Tobacco Alliance.

Consumers have the right to voice their opinion on the various proposals, both legislative and regulatory, that impact the use of cigarettes by adults – including opposing further tax increases and requesting proof that tobacco-control dollars are being used as intended. If you are not already a registered voter, that's the first step to take. For more information, visit Adult Choices.