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Perspective | Raise Revenue, Cut Costs, Save Lives

Cigarette taxes best investment Kentucky could make in itself
Mark Green is executive editor of The Lane Report.
Mark Green is executive editor of The Lane Report.

One of the biggest win-wins Kentucky residents get is when their legislators raise cigarette taxes. And the bigger the increase, the bigger the win. Higher cigarette taxes not only raise much-needed revenue, they are an investment in seriously lowering spending needs in the future. It also communicates to the world that Kentucky’s priorities are changing for the better.

Among the biggest challenges in approaching the issue of raising cigarette taxes is trying to list all the benefits.

Sixty-nine percent of registered Kentucky voters favor a $1 cigarette tax hike, according to Mason Dixon Polling & Strategy, a respected national opinion survey firm. Support rises to 73 percent when those polled are told a $1 tax would raise about $250 million a year for Kentucky and prevent about 20,000 kids from becoming smokers.

Legislators need to provide more revenue for state government. Paying down the state’s unfunded pension liability is absolutely the responsible thing to do – Gov. Matt Bevin deserves great credit for making this happen – but it means very painful spending cuts in vital public services such as education. Education needs more support rather than less if Kentucky is to achieve its goals.

Comprehensive tax reform is the key to supporting Kentucky’s public services, which provide the foundation necessary for private-sector successes. Yet, achieving that goal remains politically difficult.

The degree of difficulty for raising tobacco taxes and revenue is almost non-existent though – see the public-support facts above. The pressure to do so, in fact, is significantly greater than that against.

Immediate revenue benefits in the next biennium are only the beginning of the payoff. The real benefits will be seen in future health outcomes. Kentucky has the highest overall cancer incidence and mortality rates in the nation. The main culprit in this excessive cancer incidence is lung cancer, which is caused primarily by Kentucky’s highest-in-the-nation smoking rate.

While the human cost of this is incalculable, the cost of medical care to treat cancer is calculable – it is breathtakingly high and costs Kentucky taxpayers hundreds of millions of dollars a year for just the patients covered by Medicaid. Imagine surgically removing that liability from the state’s budget obligations.

Fortunately, there is a known tool for decreasing the incidence of smoking and its related health problems: increase the price.

The Coalition for a Smoke Free Tomorrow, which comprises nearly 150 organizations in the commonwealth, supports an increase in Kentucky’s excise tax of at least $1 a pack on cigarettes and parallel increases on other tobacco products. Research shows increasing the price of cigarettes significantly reduces smoking among the most price-sensitive populations: young, beginning smokers as well as a large cohort who also deserve attention –  those with alcohol, drug or mental disorders.

More than 40 percent of those who smoke in Kentucky and the United States also have alcohol, drug or mental disorders. According to the Coalition for a Smoke Free Tomorrow, a 10 percent price increase would result in an 18.2 percent decline in smoking among persons living with a mental illness or a substance-use disorder.

Every year, smoking kills 8,900 Kentuckians, more than six times the number who died in 2016 in the commonwealth’s opioid crisis. Nationwide, smoking kills more than 200,000 persons living with mental illness every year.

Those in socio-economic distress are another especially vulnerable Kentucky population. Cancer-risk behaviors such as smoking or not being screened are closely tied to high rates of poverty and low educational attainment, a University of Kentucky Markey Cancer Center analysis found. While 14 percent of the U.S. population lives below the federal poverty level, the rate is as high as 42 percent in Kentucky Appalachian counties where smoking rates are highest.

A $1 a pack cigarette tax hike would be about a 20 percent increase in price, which could reduce smoking by nearly 40 percent in vulnerable populations.

What would you think about legislators who reduced the state’s smoking rate, cut Medicaid costs by many tens of millions of dollars, and raised $250 million in revenue that could better fund educational attainment, which is highly likely to lower smoking rates further? What would people outside the state think?

We suggest everyone would be impressed.


Mark Green is executive editor/vice president of The Lane Report. He can be reached at [email protected]