Posted by: audreybenenati | January 27, 2010

2010-2011 Executive Budget – Briefing Book–A Healthier New York

The Executive Budget will make New York a leader in improving the long-term health of its citizens through two proposed tax actions – a $1.00 increase in the cigarette excise tax and a new excise tax on beverage syrups and soft drinks. These dedicated taxes are intended to lower long-term health care costs by discouraging unhealthy consumption habits that put New Yorkers at risk for obesity, diabetes, cancer, heart failure, strokes, and other diseases.

Dedicated Tax on Cigarettes

According to the Federal Centers for Disease Control and Prevention (CDC), adverse health effects from cigarette smoking account for more for than 400,000 deaths per year, including the deaths of approximately 25,000 New Yorkers. More deaths are caused each year by tobacco use than by HIV, illegal drug use, alcohol use, motor vehicle injuries, suicides and murders combined. Smoking dramatically increases the risk of:

  • Coronary heart disease by 2 to 4 times
  • Stroke by 2 to 4 times
  • Men developing lung cancer by 23 times
  • Women developing lung cancer by 13 times
  • Dying from chronic obstructive lung diseases by 12 to 13 times

The proposed cigarette tax increase in Governor Paterson’s Executive Budget from $2.75 to $3.75 is estimated to decrease cigarette use by a total of 14 percent, helping to prevent instances of these serious health problems. According to estimates by the Campaign for Tobacco-Free Kids, an increase of this magnitude would be expected to prevent more than 100,000 children from becoming smokers and cause more than 50,000 adult smokers to quit.

A clear negative relationship exists between the price of cigarettes and consumption levels. The following graph, replicated from the Campaign for Tobacco-Free Kids, shows national declines in consumption levels as the average price of cigarettes increased.

Health experts have long advocated increases in cigarettes taxes as a method for reducing smoking. In 2000, the U.S. Surgeon General stated, “Substantial increases in the excise taxes on cigarettes would have a considerable impact on the prevalence of smoking and, in the long term, reduce the adverse health effects caused by tobacco.”

In its 2006-07 Annual Report, the President’s Cancer Panel stated, “Increases in tobacco excise taxes, which are passed along to consumers in the form of higher tobacco product prices, have proven highly effective in reducing tobacco use by promoting cessation among current users, discouraging relapse among former users, preventing initiation among potential users, and reducing consumption among those who continue to use tobacco.” The Panel, which is part of the National Institutes of Health, included among its recommendations, “Encourag[ing] state governments to further increase tobacco excise taxes to discourage purchase of cigarettes and other tobacco products.”

New York State has been a national leader in the effort to discourage tobacco use through its cigarette excise tax. In the past ten years, New York has increased the cigarette excise tax three times, from $0.56 at the beginning of 2000 to the current rate of $2.75 per pack. In the year following the June 3, 2008 cigarette excise tax increase, the New York State Department of Health Smoker’s Quitline received over 220,000 calls – a record number.

According to survey data from CDC, in the late 1990s, New York’s adult smoking rate closely mirrored the national rate. However, as the State increased cigarette taxes at the beginning of

the decade, the adult smoking rate has fallen well below the national average.

There have been even greater reductions in youth smoking as the price of cigarettes has increased. According to research compiled by the Campaign for Tobacco-Free Kids, “every 10 percent increase in the real price of cigarettes reduces overall cigarette consumption by approximately three to five percent, reduces the number of young-adult smokers by 3.5 percent, and reduces the number of kids who smoke by six or seven percent.”

The 2010-11 Executive Budget proposes to increase the cigarette tax by an additional $1.00 per pack to further encourage New Yorkers to quit smoking, discourage non-smokers from starting to smoke and to keep New York’s children healthy. Revenues from this dedicated tax increase will be invested, through HCRA, in the State’s numerous health care programs. To address the issue of tax evasion on Indian reservations, the Department of Taxation and Finance (DTF) will withdraw its Advisory Opinion regarding their policy of forbearance of sales by agents of unstamped product to Indian retailers. The DTF will promulgate rules and regulations to implement the Indian tax exempt coupon system. This action will permit the State to seek the lifting of the injunction preventing the State’s statute prohibiting the sales of unstamped cigarettes to Indian retailers from going into effect.



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