Business, Economics and Jobs

Obama wants to nearly double cigarette tax


A woman smokes a cigarette in the pedestrian thoroughfare located in Times Square May 23, 2011 in New York City. A new study has found that quitting smoking by 30 almost eliminates early death risk.


Daniel Barry

US President Barack Obama's new budget would nearly double the cigarette tax, slapping an additional 94 cents onto the current $1.01-a-pack tax, reported CNN Money

The president wants to put the money toward early childhood education programs, but critics say because most smokers are middle-to-lower class, the non-sliding-scale tax will hurt those already hardest-hit, said CNN.

But Obama argues that the "increase would have substantial public health benefits, particularly for young Americans," CNN said, citing the budget. "Researchers have found that raising taxes on cigarettes significantly reduces consumption, with especially large effects on youth smoking."

The Obama administration seems to be pushing this line. "Young smokers are incredibly price sensitive," observed Health and Human Services' Secretary Kathleen Sebelius a few days ago, according to The Associated Press. Upping the tax to $1.95 a pack will presumably be a further deterrent -- CNN said cigarette sales fell by ten percent four years ago after the government increased the cigarette tax.

Thus, Obama's proposed federal cigarette tax "could have a huge effect on public health" given that one-in-five Americans smoke, said AP

The US spends $193 billion a year on smoking-related costs, if direct medical payments and productivity losses are taken into account, according to a large Centers for Disease Control study conducted in the early 1990s, said CNN