ASSOCIATED PRESS
WASHINGTON -- Tobacco users are facing a big financial hit as the largest federal tobacco tax increase ever takes effect Wednesday.
Tobacco companies and public-health advocates, longtime foes in the nicotine battles, are each trying to turn the situation to their advantage. Major cigarette makers raised prices in recent weeks, partly to offset any drop in profits once the per-pack tax climbs from 39 cents to $1.01. Medical groups, meanwhile, see a tax increase in the middle of a recession as a great incentive for smokers to quit.
President Barack Obama signed a health initiative soon after taking office to increase the tobacco taxes to finance a major expansion of health insurance for children. Other tobacco products, from cigars to pipes and smokeless tobacco, will also see similarly large tax increases. For example, the tax on chewing tobacco will go from 19.5 cents per pound to 50 cents. The total expected to be raised over the 4½ year health-insurance expansion is nearly $33 billion.
Separately, Congress is considering legislation to empower the Food and Drug Administration to regulate tobacco. That could lead to reformulated cigarettes. President Obama, who has struggled with 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. "Every time that the tax on tobacco goes up, the use of cigarettes goes down," he said.
this seems like a regressive tax to me. :/
dr. timothy gardner is brilliant! he claims that tobacco is not a giffen good!
rolling tobacco is going up in price twenty-fold.
I, for one, am glad I quit smoking ... (btw. I thought you also quit Lucas...)
author says "a tax increase in the middle of a recession (is) a great incentive for smokers to quit". This is a more complex question. is cigarettes a normal (income up, consumption up) or inferior good (income down, consumption up)? one could make the argument that it is inferior which would mean that more people would start smoking as their incomes fell (possibly as a result of the increased stress).