Winston-Salem Journal Editorial
As legislators face what is likely to be at least a $2.1 billion revenue shortfall for the next fiscal year, there is talk of a major cigarette-tax increase to close the budget gap.
If legislators raise cigarette taxes this year, however, they should do so not for budget reasons but for those related to public health. North Carolina should raise the cigarette tax only if legislators determine that it will make this a healthier state.
Although a tax bill is unlikely to emerge from the General Assembly until this summer, it is important that North Carolinians begin to consider this possibility now. There are good arguments on both sides.
Many in our area have long opposed cigarette-tax increases because Forsyth County depends on the industry for jobs.
When taxes go up, cigarette use goes down. North Carolina has raised its cigarette tax twice in the past five years, and the percentage of the population smoking has dropped both times.
In addition, as we have argued in the past, cigarette taxes are inherently regressive. Smoking is addictive, and when the tax goes up, some addicts will be squeezed. The extra $2.50 for a carton of smokes hurts the low-income smoker much more than his counterpart in the executive suite.
Similarly, cigarette-tax increases are not good public-tax policy because they start a downward spiral in the very revenues they raise.
As smokers quit or scale back because of the high price of cigarettes, the state collects less revenue per unit of tax. Good revenue policy is built on taxes that grow with the economy, not the other way around.
Nonetheless, the health evidence against smoking is overwhelming. And the costs to our society that arise from smoking are enormous. A great many of these costs are borne by taxpayers through federal and state health-care programs.
When North Carolina raised the cigarette tax by 25 cents in 2005, the impact was immediate. Researchers found that fewer youngsters were smoking. Another nickel increase in 2006 led to another drop.
The federal government raised its 39-cent-a-pack tax to $1.01 yesterday. The new revenue will go to child-health programs. North Carolina now charges a total of 35 cents, lower than all but five other states.
If it is clear that these tax increases improve public health, then legislators should make that the basis of any decision to raise the cigarette tax. That way, programs can be designed to help low-income smokers quit and to keep young people from starting in the first place. And the revenue from the tax increases can pay for those efforts.