Regardless of how they satisfy their nicotine cravings, tobacco users are facing a big hit as the largest federal tobacco tax hike ever goes into effect on Wednesday. CAROLYN KASTER / FILE / ASSOCIATED PRESS
62-cent-per-pack hike is most in U.S. history
By Ricardo Alonso-Zaldivar • ASSOCIATED PRESS • March 30, 2009 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 hike 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. 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 4½-year-long health insurance expansion is nearly $33 billion.
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.
Promising prospects 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.
Philip Morris USA, the largest tobacco company and maker of Marlboro, is forecasting a drop in sales, but spokesman Bill Phelps said he cannot predict how big.