Nation/World

Why a pack of cigarettes costs $13 in New York City but less than $5 in Kentucky

For more than a decade, Kristin Page-Nei begged Montana lawmakers to raise cigarette prices. As a health advocate for the American Cancer Society, she watched year after year as other states increased their cigarette taxes and lowered their smoking rates. "What they're doing is saving lives," she kept saying.

Finally, this spring, she helped convince state senators to raise cigarette taxes for the first time in 12 years. Then came the tobacco lobbyists.

Bankrolled by the country's two biggest cigarette companies, they swarmed the halls of the state capitol, wined and dined Republican leaders, launched a sophisticated call-in campaign and coached witnesses for hearings. The tobacco companies pouredmore than $200,000 into Montana, a state with barely a million residents.

It took them just one week to kill the bill – from the time it passed the state Senate to its last gasps in a state House committee. The tobacco lobby was so effective that, in the end, eight of the bill's original co-sponsors voted against it.

"It was incredible. Just brutal," Page-Nei said. "I'd never seen this amount of money being poured into a session in my 17 years here."

Health experts agree that raising taxes is the most effective way to reduce tobacco use. The U.S. surgeon general, the World Health Organization and the Centers for Disease Control and Prevention have all concluded that raising taxes helps large numbers of smokers to quit and have advocated loudly for it.

But many states – Missouri, Kentucky and Georgia among them – have not significantly increased their cigarette fees in decades, bowing to pressure from tobacco lobbyists and an ingrained antipathy among conservatives to raising taxes of any kind.

ADVERTISEMENT

As a result, America's smokers are increasingly concentrated in states where cigarettes are cheap. A pack of cigarettes will soon cost $13 in New York City, where a tax hike of $2.50 was recently passed. But in Kentucky – the state with the highest rate of smokers, at 25.9 percent, compared to the national rate of 15 percent – you can buy that same pack for $4.77 on average.

"People around here just don't like the 'tax' word," said Ellen Hahn, a tobacco control expert at University of Kentucky who has struggled for years to raise Kentucky's 60 cents per pack cigarette tax. "Between that and the grip of the tobacco industry on our legislature, it's hard to convince anyone, especially politicians."

The huge gap in prices is the result of a long-running war between tobacco companies and health advocates. It is also, experts say, one of the biggest reasons low-tax states now suffer from high rates of cancer, heart disease, diabetes and a multitude of other tobacco-related diseases.

"It's incredibly frustrating because unlike so many other problems in the country, this is one case where we know the solution," said Matthew Myers, president of the Campaign for Tobacco-Free Kids. "Not only that. It's a solution that's widely popular, doesn't cost the government anything, yet these states refuse to do it."

In the 1980s, some states started aggressively raising cigarette taxes to combat smoking. Over the years, overwhelming research has proved it works. But there's one wrinkle: The tax increase has to be large, or else it has little effect on smokers.

As a result, the battle has increasingly focused on not just whether states should increase taxes, but by how much.

Health advocates regularly fight for $1 to $2 increases, while cigarette companies push to limit them to hikes of 25 to 50 cents. That has led, at times, to bizarre conflicts.

Last year, when Missouri considered raising its cigarette tax for the first time in more than two decades, tobacco companies actually supported the increase, while health groups such as the American Cancer Society strongly opposed it.

The reason? The proposed increase was so low – either a gradual 23 cent hike or a 60 cent increase over four years – that researchers concluded smokers would pay it and keep smoking.

The Missouri fight was particularly important because the state has the lowest cigarette tax in the country. These days, Missouri smokers pay only 17 cents per pack,plus the nationwide federal tax of $1.01 cents.

In New York City, smokers currently fork over $1.50 per pack in city cigarette taxes and another $4.35 in state cigarette tax. And a new law taking effect next year will require every store in the city to sell cigarettes for no less than $13.

Missouri has one of the highest smoking rates in the country at 22.1 percent – compared with New York City's smoking rate of 14.3 percent.

When tobacco companies supported the incremental tax increase in Missouri, health advocates accused them of using the small bump to avoid larger hikes in the future.

Tobacco giant R.J. Reynolds, which spent $12.5 million for the cause, denied that motive, saying it promoted the tax because it didn't hurt consumers and retailers and because the money would go to a good cause – early-childhood education. "We thought it was a reasonable, common-sense proposal," R.J. Reynolds spokesman David Howard said.

Ultimately, the tax proposal failed – becoming a Pyrrhic victory for health advocates and a new talking point for the tobacco company.

"I find it ironic that health groups didn't support it," Howard said. "Look at what happened as a result. Missouri still has the country's lowest tax, and it's nothing but the status quo."

[Big tobacco's new cigarette is sleek, smokeless – but is it actually healthier?]

ADVERTISEMENT

Almost every year, public-health advocates target states that seem particularly amenable to cigarette tax increases – where legislators face a revenue shortage or where polling shows growing support.

Health advocates often portray cigarette taxes as a win-win-win proposition. The taxes generate revenue for cash-strapped legislatures. They reduce states' health-care costs. And they are incredibly effective at reducing smoking, especially among the most vulnerable groups: young people, pregnant women, low-income smokers and minorities. For every 10 percent increase in cigarette price, experts say, you can expect an overall reduction in cigarette consumption of 3 to 5 percent and an even greater reduction among youths of 6 to 7 percent.

Tobacco companies, however, paint such tax hikes as unfairly exorbitant, and their industry as overtaxed. They point out that from 2000 to 2014, federal and state cigarette taxes have been raised 120 times. They argue that higher taxes hit the pocketbooks of convenience store owners and smokers, and amount to a regressive tax on the poor.

That last argument – that tobacco companies are looking out for the poor – angers public-health officials because studies show such taxes are especially effective at reducing smoking among lower-income people. By helping them quit, advocates say, taxes actually help struggling families escape the economic burden that cigarette addiction puts on their monthly income.

But the most effective argument by tobacco companies has been the libertarian one: That adults should be free to choose whether to smoke and not be prodded into quitting by a nanny state.

"It's essentially saying big government needs to make your decisions for you," said Howard, the R.J. Reynolds spokesman, in a phone interview.

In recent decades, as opposition to taxes has increasingly become a Republican tenet, it has become harder to raise the price of cigarettes in red states.

"Once upon a time, it used to be a bipartisan issue," said Myers, who has campaigned for higher cigarette taxes for more than a quarter of a century. What changed was the rise of ideological figures such as Grover Norquist, president of Americans for Tax Reform, and the no-tax pledges GOP officials were pressured to sign, he said.

ADVERTISEMENT

A nationwide analysis of 31 years of cigarette taxes by University of North Carolina researchers found that Republican control of a state was a key predictor for its cigarette tax rates.

Internal documents disclosed in lawsuits show how seriously tobacco companies perceive the threat of cigarette taxes, with several tobacco companies calling tax hikes the most alarming, existential threat they face. Over the years, those companies have invested heavily in conservative and libertarian political groups.

Because tobacco lobbyists hold sway over state lawmakers, health officials have tried in many states to bypass them, using ballot initiatives that put the decision in the hands of voters. But tobacco companies have managed to block those efforts as well. Last year, three out of four tax increases were defeated at the polls, with tobacco companies outspending health groups at enormous ratios.

In North Dakota, R.J. Reynolds and Altria, the parent company of Philip Morris USA, spent $3.6 million compared with $21,691 raised by supporters of the initiative, according to an analysis by the Pew Charitable Trusts. In Colorado, Altria spent $16.9 million compared with $2.5 million from supporters.

But the prize fight for both sides last year was California, where tobacco companies amassed a campaign war chest of $71.3 million, almost double the funds raised by a coalition of health groups.

The California initiative proposed raising the cigarette tax in America's most populous state- for the first time in 18 years – by a whopping $2.

Polling for more than a decade had shown sizable support among Californians for a cigarette-tax increase. But a ballot initiative in 2006 had fallen narrowly short in the face of a $66 million campaign orchestrated by the tobacco industry. The next attempt, in 2012, failed even more narrowly – by less than 1 percent of voters – after a $48 million tobacco-funded campaign.

Last November, health advocates finally prevailed, with the proposition passing by an overwhelming 29 percentage points. The increase took effect this April, and early data suggests it is already causing a huge drop in sales. An analysis by nonprofit CALmatters in July showed a 56 percent year-over-year decrease in distributor-to-retailer sales during the two months after the tax hike. And tobacco companies are already trying blunt its effect with coupons and discount programs throughout the state.

Some health experts hope the victory in California will lead to breakthroughs elsewhere. But Myers, of the Campaign for Tobacco-Free Kids, sees little changing soon in states such as Missouri and Kentucky.

"People have literally been dying from this problem for years and that still hasn't made a difference for those legislators," he said. "The only hope I see is the economics: When the mounting health-care costs from sick and dying smokers finally gets to a point where lawmakers have no choice but to raise the cigarette taxes."

ADVERTISEMENT