Governor proposes tax increase on cigarettes and candy for 2013

By Nancy Pierce

Cigarette smokers and candy lovers may face higher prices on their guilty pleasures if Governor Deval Patrick’s proposal to increase taxes on cigarettes and candy passes in the budget.

Sarah Doremus/Collegian

Patrick has proposed a 50-cent tax increase on cigarettes, as well as a tax increase on candy and soda sweetened with sugar, in order to raise revenue for health care and public health preventative costs for the fiscal year 2013. The per pack cigarette tax would increase from $2.51 to $3.01.

Rachael Neff, the deputy spokesperson for the Executive Office of Administration and Finance, sent a document titled “Revenues Proposed in FY 2013 Budget Proposal,” outlining the proposed taxes and expected revenue from the taxes.

According to the document, the proposed tax increase on cigarettes would raise $62.5 million and increased taxes on cigars and smokeless tobacco products would raise $10.4 million.

The document states, “100 percent of the revenues from the cigarette and other tobacco tax increases will be dedicated to the Commonwealth Care Trust Fund to support health care coverage and expand MassHealth’s successful smoking cessation program to other agencies.”

The funds raised from the proposed taxes will go toward health care for all eligible legal immigrants, mandated by a recent court decision.

The proposal also includes raising $61.5 million by eliminating the sales tax exemption on candy and sweetened soda.

“State health officials estimate that more than half of all adults and nearly one third of children in middle school and high school are overweight or obese,” according to the proposed revenues document.

This proposed increase on the price of cigarettes is a positive thing for the American Cancer Society, according to Director of Government Relations and Advocacy, Mark Hymovitz. However, Hymovitz said the society will be working with legislators to bump the tax increase up to $1-$1.25.

“Evidence shows you need to increase the price by more than 10 percent to get the reduction in smoking. While we’re thrilled the governor is taking on the issue of tobacco taxes, we are a bit concerned it is only 50 cents.”

In the early 2000’s, 335 million packs of cigarettes were sold, according to Hymovitz. He said the last time the cigarette tax increased in 2008, 278 million packs were sold. In 2009, Hymovitz said the sale of packs dropped to 225 million.

Other factors could be involved with the trend of declining cigarette sales, but Hymovitz said this trend is consistent not just in the state but across the country as well.

“Whenever a state increases cigarette tax, there is always a drop in utilization,” he said.

According to Hymovitz, tobacco-related illness is responsible for $4.5 billion in Massachusetts, and 10 percent of health care costs.

“By increasing taxes on tobacco, and expanding access to smoking cessation products, increasing funding for state tobacco control programs, the governor has begun the conversation of tackling the problem of tobacco use in Mass.,” said Hymovitz.

The proposed tax faces some opposition and debate whether it is an effective means for increasing revenue.

Tammi Myrer, sophomore psychology major at UMass, is a non-smoker and also does not agree with increasing the tax on cigarettes. She noted that the price of cigarettes in New Hampshire is much lower than in Massachusetts.

Michael Whiteman, accounting and information systems professor at the University of Massachusetts said the tax is not effective because it could actually lose revenue instead of gain.

“Cigarette tax can be easily dispensed with … people can go out of state and avoid the Massachusetts tax,” said Whiteman noting the state’s proximity to New Hampshire where the price of cigarettes is less.

Instead of putting a tax on dispensable products, Whiteman suggested raising the state income tax because it affects everyone.

He called the increase on cigarette tax a politically savvy way to increase taxes.

He said the increase is “picking on an element of society that is almost defenseless because they’re addicted. The vast majority of people who do not smoke will applaud the state.”

Nancy Pierce can be reached at [email protected]