A University of Illinois economist told an Iowa audience today that there is no evidence raising the state tax on cigarettes will prompt very many smokers to go elsewhere to buy their cigarettes. University of Illinois economics professor Frank Chaloupka has been studying the economics of tobacco sales for 20 years. He predicts a $1 per-pack increase in Iowa’s cigarette tax would mean that about 25-million fewer packs of cigarettes are sold in Iowa.
Yet the professor says despite that dip in sales, with the higher tax rate there will be a significant increase in state tobacco taxes. He estimates as much as 175-million more will be collected from tobacco users. Chaloupka says there’s no evidence that very many smokers in Iowa will turn to the Internet, bootleggers or stores on Native American reservations to buy their cigarettes to escape the higher tax.
"It’s no where near as much as people are arguing," Chaloupka says. "It’s going to be relatively minimal." Chaloupka also says the evidence shows that raising the tobacco tax helps reduce smoking rates.
For every 10 percent increase in the price of tobacco products, there’s a four percent overall reduction in tobacco use, according to Chaloupka, a two percent decrease in smoking rates among adults and a six percent decrease among kids.
This afternoon at three o’clock, a legislative committee will consider a bill that increases the state cigarette tax by a dollar a pack. Anti-smoking forces are at the statehouse today, lobbying for the bill.
Doctor Christopher Squire, a cancer researcher at the University of Iowa, says all the data indicates raising the tax will prompt some adults to quit and prevent thousands of teens from taking up the habit.
"The single-most effective way to reduce tobacco use is to put up the cost," Squire says. "I mean this is hardly rocket science. This is just simple economics. It works." Iowa’s current tax on cigarettes is 36-cents-a-pack, lower than all neighboring states except Missouri.
"We are way out of step with our neighboring states. In fact, we’ve become the ashtray of the Midwest," Squire says. "I think it’s time to throw that ashtray out."