Cigarette taxes could be reformed in a way that discourages underage people from starting to smoke, while also relieving the financial burden on poor people who find themselves unable to quit.
A recent study suggests that additional increases in cigarette taxes won’t cut smoking by poor people; it will just leave them poorer as a result of the added financial burden. By contrast, the study found that increased cigarette taxes do reduce cigarette consumption by well-off people slightly.
One possible explanation for this seemingly counterintuitive result may be that the poor smokers who were able to quit easily already did so in response to past cigarette tax increases, leaving behind a core group of poor smokers who are so addicted that they were unable to quit even in response to more recent tax increases .
One solution to this might be to replace existing cigarette taxes with a new one designed to discourage cigarette consumption by young people rather than further burden the poor.
Young people, who are status-conscious, tend to smoke one of three expensive premium cigarette brands: Marlboro, Newport, or Camel (as The Wall Street Journal noted on October 3, 2000). You could call these “gateway cigarettes,” since it is these brands that are the gateway to a lifetime of cigarette addiction.
By contrast, poor people, especially older people people, often smoke cheaper cigarettes, like those produced by the small independent tobacco companies that did not join the 1998 Master Settlement Agreement. They become less image-conscious as they age. (Smokers tend to be poorer on average than non-smokers).
Right now, both expensive gateway brands and cheap cigarette brands are taxed at exactly the same rate, meaning that the taxes are no higher for young people (who are deciding whether to pick up the habit of smoking, but will smoke expensive cigarettes if they do) than poor older people (who smoke cheaper cigarettes after trying and failing to quit).
That should be changed. Instead of the current flat tax, cigarettes should be subject to a percentage sales tax like other items we buy. The more expensive the cigarette brand, the higher the tax. The cheaper the brand, the lower the tax.
That would increase the taxes on the gateway cigarettes that entice young people to begin smoking, while reducing the burden on hapless older people who smoke cheap discount brands of cigarettes, after having tried many times to quit smoking, only to fail because of their addiction, leaving both their finances and their health at risk.