State senators Rodney Ellis and Judith Zaffarini proposed raising the state cigarette tax by as much as $1 per pack to generate an additional 1.5 billion dollars for health care spending in the 2004-2005 budget.
Ellis indicated that higher cigarette taxes would raise needed revenues in the face of a budget crunch, help pay for smoking-related health costs, discourage youth tobacco use, and motivate adults to quit as well.
The current cigarette tax in Texas is 41 cents per pack (24th among all states).
Revenue from the current tax rate in 2001 was over $480 million dollars.
However, Medicaid program smoking treatment costs totaled $1.3 billion dollars for the same year.
Projected benefits from increasing the state cigarette taxes by $1.00 per pack are summarized as follows (data derived from the Campaign for Tobacco Free Kids, June 6, 2002):
New state cigarette tax revenues each year: $1,079.1 million dollars
New state sales tax revenues: $38.9 million
Fewer packs of cigarettes smoked each year: 152.9 million
Percent decrease in youth smoking: 11.3%
Number of current adult smokers in Texas who would quit: 185,200
5-year health care savings from fewer smoking-caused heart attacks and strokes: $64.2 million
Cigarette tax increases both reduce smoking levels and increase state revenues because the increased tax per pack brings in more new revenue than is lost from the decrease in the number of packs sold.
