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Smoke break gets more expensive with tax boost


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Smoke break gets more expensive with tax boost

By RICARDO ALONSO-ZALDIVAR

Associated Press Writer

WASHINGTON — However they satisfy their nicotine cravings, tobacco users are facing a big hit as the single largest federal tobacco tax increase ever takes effect Wednesday.

Tobacco companies and public health advocates, longtime foes in the nicotine battles, are trying to turn the situation to their advantage. The major cigarette makers raised prices a couple of weeks ago, partly to offset any drop in profits once the per-pack tax climbs from 39 cents to $1.01.

Medical groups see a tax increase right in the middle of a recession as a great incentive to help persuade smokers to quit.

Tobacco taxes are soaring to finance a major expansion of health insurance for children. President Barack Obama signed that health initiative soon after taking office.

Other tobacco products, from cigars to pipes and smokeless, will see similarly large tax increases, too. For example, the tax on chewing tobacco will go up from 19.5 cents per pound to 50 cents. The total expected to be raised over the 4 1/2 year-long health insurance expansion is nearly $33 billion.

Smokers are mulling their options.

Standing outside an office building in downtown Washington last week, 29-year-old Sam Sarkhosh puffed on a Marlboro Light. His 8-year-old daughter has been pleading with him to quit, he explained, and he has set a goal to give up smoking by his 30th birthday.

"I'm trying to quit smoking, and it could help," said Sarkhosh, an information systems specialist. "I don't think it will stop me from buying cigarettes every now and then, but definitely not as often." A friend who smokes Camels went out and bought four cartons in advance, he said.

The tax increase is only the first move in a recharged anti-smoking campaign. Congress also is considering legislation to empower the Food and Drug Administration to regulate tobacco. That could lead to reformulated cigarettes. Obama, who has agonized over his own cigarette habit, said he would sign such a bill.

Prospects for reducing the harm from smoking are better than they have been in years, said Dr. Timothy Gardner, president of the American Heart Association. The tax increase "is a terrific public health move by the federal government," he said. "Every time that the tax on tobacco goes up, the use of cigarettes goes down."

About one in five adults in the United States smokes cigarettes. That's a gradually dwindling share, though it isn't shrinking fast enough for public health advocates.

The Centers for Disease Control and Prevention says cigarette smoking results in an estimated 443,000 premature deaths each year, and costs the economy $193 billion in health care expenses and lost time from work. Smoking is a major contributor to heart disease, cancer and lung disease.

Public health officials are urging individual doctors and staff at telephone "quit lines" in every state to make the most of the tax increase by reaching out to smokers. But it's unclear how deeply the tax will cut into tobacco consumption.

Eric Lindblom, research director for the Campaign for Tobacco-Free Kids, says he expects a drop of at least 6 percent to 7 percent among young smokers.

Philip Gorham, who tracks the tobacco business for Morningstar, the investment research firm, said he expects an overall drop of 4 percent to 5 percent this year. What happens after that is less certain, especially as the economy recovers.

"I would expect a road bump this year," said Gorham. "But these companies will still be extremely profitable. I still think they will make their return on capital by wide margins in the long run."

Philip Morris USA, the largest tobacco company and maker of Marlboro, is forecasting a drop, but spokesman Bill Phelps said he cannot predict how big. Philip Morris raised Marlboro prices by 71 cents a pack early this month, and prices on smaller brands by 81 cents a pack. Other major companies followed suit.

The pricing moves raised eyebrows. "That's nothing more than greed," said Kevin Altman, an industry consultant who advises small tobacco companies. "They weren't required to charge that until April 1. They are just putting that into their pockets."

Responded Phelps: "We raised our prices in direct response to the federal excise tax increase, and people who are upset about that should find out how their member of Congress voted, and contact him or her."

Some policy analysts have questioned the wisdom of boosting tobacco taxes to finance health care for children. They argue that the fate of such a broad program should not depend on revenues derived from a minority of the adult population, many of whom have low incomes and are hooked on a habit. The tobacco industry is also warning that the steep increase will lead to tax evasion through old-fashioned smuggling or by Internet purchase from abroad.

But smoking control advocates such as Lindblom say tobacco taxes should be even higher. "There's a lot of room to go after cigars and smokeless," he said. "We are certainly hopeful that health care reform will include some more increases."

Standing outside a Washington department store, attorney Margaret Webster, 42, puffed on a Marlboro Ultra Light and lamented the fact that the government is reaching deeper into her pocketbook.

"I don't think we (smokers) like it," she said. "But I've heard so many people say they were going to quit when the price went up ... and they're still smoking."

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I don't have much of a dog in this fight, but I do have a question:

If the purpose of this is two-fold (get people to quit smoking and raise money for childrens' healthcare), and the FIRST purpose is fulfilled (a lot of people quit smoking), where is the money for childrens' healthcare going to come from?

I know I'm not a Washington insider, but I have to confess, it makes no sense to me to tax something to raise money and also get people to quit doing the very thing you're taxing. Just saying.

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I don't have much of a dog in this fight, but I do have a question:

If the purpose of this is two-fold (get people to quit smoking and raise money for childrens' healthcare), and the FIRST purpose is fulfilled (a lot of people quit smoking), where is the money for childrens' healthcare going to come from?

I know I'm not a Washington insider, but I have to confess, it makes no sense to me to tax something to raise money and also get people to quit doing the very thing you're taxing. Just saying.

I think the first part is more of a "say it because it sounds nice" kind of thing, knowing that most smokers will not quit based on price increase. While some smokers may quit, these folks know that an addict is an addict and money will continue to roll in.

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I think the first part is more of a "say it because it sounds nice" kind of thing, knowing that most smokers will not quit based on price increase. While some smokers may quit, these folks know that an addict is an addict and money will continue to roll in.

So they are taking advantage of the poorest segment of our society (do the research on that) to finance their big government health initiative?

Assuming that's right, they should have just started a lottery instead. It would have been more honest.

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So they are taking advantage of the poorest segment of our society (do the research on that) to finance their big government health initiative?

Assuming that's right, they should have just started a lottery instead. It would have been more honest.

I agree completely. Then again, I'm an idiot smoker who is still paying $5 a pack (and soon to be more). Us addicts have our priorities all out of whack.

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I know this has nothing to do with the tax, but when I read the header it reminded me of something I have never understood.

I have worked for employers who would steal their moms medication to save a penny, yet had no issues whatsoever giving people who smoked 15 minute on the clock breaks to go stand somewhere and puff a cigarette on their dime.

I never got that.. nor the argument that a content worker is a better worker because for every one who gets that extra break, there are 5 non smokers seething at having to work while this addict gets an extra break.

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Someone posted this a month or so ago and I decided then to quit smoking. I have been on the nicotine patch since March 1st. After doing the math, I will save around $300 a month. I often wonder why the lower income people are the ones who smoke. I know this for a fact because I work at a very expensive condo and maybe 1% of the rich people that live here are smokers, yet all the employees here make $45,000 a year or less and they all smoke. I don't make a ton of money so an extra $300 will help a lot.

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I know this has nothing to do with the tax, but when I read the header it reminded me of something I have never understood.

I have worked for employers who would steal their moms medication to save a penny, yet had no issues whatsoever giving people who smoked 15 minute on the clock breaks to go stand somewhere and puff a cigarette on their dime.

I never got that.. nor the argument that a content worker is a better worker because for every one who gets that extra break, there are 5 non smokers seething at having to work while this addict gets an extra break.

i don't know, maybe the smokers productivity would drop if they didn't get a chance to smoke?

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So they are taking advantage of the poorest segment of our society (do the research on that) to finance their big government health initiative?

Assuming that's right, they should have just started a lottery instead. It would have been more honest.

Smokers don't count as any segment of society they can come from anywhere and chose there habbit, they don't wanna pay the tax, simple quit.

too bad they started.

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Someone posted this a month or so ago and I decided then to quit smoking. I have been on the nicotine patch since March 1st. After doing the math, I will save around $300 a month. I often wonder why the lower income people are the ones who smoke. I know this for a fact because I work at a very expensive condo and maybe 1% of the rich people that live here are smokers, yet all the employees here make $45,000 a year or less and they all smoke. I don't make a ton of money so an extra $300 will help a lot.

Good for you! Thanks for lowering everyone's healthcare costs in the process!

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Someone posted this a month or so ago and I decided then to quit smoking. I have been on the nicotine patch since March 1st. After doing the math, I will save around $300 a month. I often wonder why the lower income people are the ones who smoke. I know this for a fact because I work at a very expensive condo and maybe 1% of the rich people that live here are smokers, yet all the employees here make $45,000 a year or less and they all smoke. I don't make a ton of money so an extra $300 will help a lot.

A lot of people are poor because they are not careful with their money.We all have vices I suppose but unless we step away from ourselves and take an honest look,our vice isn't a vice, it's a hobby or a pastime. I collect books and vinyl records. If I step back and look at the amount I spend on those things..especially the books I would think I am a madman. Not to mention the shelving around the house. I do somewhat keep my addiction in check by only buying used books and have a definite amount I am willing to spend. For records, I won't pay over 2 bucks, I don't care what it is. I guess that is where smokers come in. They have to draw the line at " I will NOT pay X amount for cigarettes and stop when it gets there.

But it's hard to see it as an addiction when it's yours. :P

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I know this has nothing to do with the tax, but when I read the header it reminded me of something I have never understood.

I have worked for employers who would steal their moms medication to save a penny, yet had no issues whatsoever giving people who smoked 15 minute on the clock breaks to go stand somewhere and puff a cigarette on their dime.

I never got that.. nor the argument that a content worker is a better worker because for every one who gets that extra break, there are 5 non smokers seething at having to work while this addict gets an extra break.

I work as a manager at a resturant, and I have 13 members of Kitchen staff, 11 of them smoke, myself and one other don't. We both take standing breaks, 15 minutes paid to stand outside and do nothing, because it's only fair, the 11 other guys aren't doing anything to help our cause when they smoke we should get the same privlege, but we choose not to smoke so we stand.

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i don't know, maybe the smokers productivity would drop if they didn't get a chance to smoke?

So why would you want a worker who's productivity is based on something like that? And as I said, there are other workers seeing these folks get breaks they don't get, so it's just not good for anyone's productivity.

One boss I had I guess got it as right as anyone. He told them you can either take your 30 minute lunch break or two 15 minute smoke breaks. I thought that was pretty fair for everyone.

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So why would you want a worker who's productivity is based on something like that? And as I said, there are other workers seeing these folks get breaks they don't get, so it's just not good for anyone's productivity.

One boss I had I guess got it as right as anyone. He told them you can either take your 30 minute lunch break or two 15 minute smoke breaks. I thought that was pretty fair for everyone.

i agree, i think that is very fair. I have never been asked on a job interview if I smoke, so maybe you can't discriminate against smokers? not sure. maybe the smokers are better workers? i don't know.

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