Do taxes influence behavior? You bet! And a recent analysis by USA TODAY shows that significantly increasing the taxes of tobacco products resulted in a marked decrease in tobacco use. Early in President Obama’s first term he signed legislation that raised federal taxes on cigarettes from thirty-nine cents per pack to just over $1 with the intention of using the additional revenue to fund expanded healthcare for children. This tax hike has resulted in three million fewer smokers and most importantly, a ten to thirteen percent decline in teenage smokers. Those who have been unable to ‘kick the habit’ have collectively forked over an additional $3 billion in taxes over the past three years. Unfortunately, many young people still believe that smoking cigarettes is ‘cool’ and makes them feel (and look) like adults. That is –until their teeth turn yellow, they figure out people are keeping their distance because of bad breath and they realize that they can no longer control the habit. I remember being in a quick-mart and having someone come in and order a carton of cigarettes. He was on oxygen and toting an oxygen bottle at the time. Once hooked, smoking is a hard habit to break.
You may remember the popular television show, “Who Wants to Be a Millionaire?” staring Regis Philbin. While the show is no longer on the air, if you’re a smoker, you could still become a millionaire just by kicking the habit. For example, a twenty-three-year-old who gave up a pack-a-day habit and invested the money in equities could have over $1,200,000 by age 65! Reverse thinking would suggest that continuing smoking costs this person over a million dollars over their lifetime. And this assumes the cost of cigarettes stays constant.
If a million bucks is not enough incentive to quit smoking, consider the research that shows that smokers, on average, die ten to nineteen years sooner than non-smokers. Life insurance companies recognize this by charging much higher premiums for smokers than for non-smokers. For example, a $1 million 20-year term policy on a 30-year old smoker cost $1,500 annually versus $435 per year for a non-smoker.
In a tough economy not only does smoking take needed money out of your budget but research indicates that there are fewer job opportunities for smokers as many employers avoid hiring smokers for a number of reasons. First, smokers tend to need to take ‘smoking breaks’ throughout the workday which is disruptive, unproductive and unfair to non-smoker employees. Second, smokers tend to have greater health related illnesses causing greater absenteeism and higher healthcare costs.
In Alabama, at the state and local level, our representatives could show leadership by banning smoking in all public places which has also been shown to reduce the number of smokers. This is one area where there is no debate…everyone benefits when there are fewer smokers.