For Release: IMMEDIATE
Date: November 21, 2006

Cigarette Tax Decreases Cigarette Use; Raises Revenue

RALEIGH – State Health Director Dr. Leah Devlin today announced that raising the cigarette tax has reduced cigarette consumption by 18 percent and increased state tax revenues by more than $110 million. That’s according to data compiled by the North Carolina Division of Public Health and the North Carolina Department of Revenue, which covers the first 10 months after the cigarette tax was increased in September 2005.

“When we pushed for increase in the cigarette tax, we knew from all of the national data that a substantial increase would lead to a decline in smoking,” said Devlin. “Now, we have proof that is the case in North Carolina as well. This is wonderful news. This means fewer North Carolinians and their families will face a lifetime of disability and tortuous early death.

“And, there hasn’t been a decrease in revenue,” she added. “Put simply, the additional revenue the state now receives per pack sold is bringing in far more revenue than the state has lost from declines in packs sales prompted by the tax increase.”

North Carolina increased its cigarette tax by 25 cents on September 1, 2005, and increased it by an additional 5 cents on July 1, 2006, bringing the state cigarette tax up to its current rate of 35 cents. The current national average is a tax of $1 per pack of cigarettes. Research shows that a 10% increase in the price of a pack of cigarettes results in a 4-7% drop in smoking rates with the largest impact on youth.

In recent years, North Carolina has recorded significant decreases in the use of tobacco by young people. North Carolina’s middle school smoking rate decreased by 61.3 percent between 1999 and 2005, dropping from a rate of 15.0 percent to 5.8 percent. Similarly, North Carolina’s high school smoking rate decreased by 35.8 percent between 1999 and 2005, dropping from a rate of 31.6 percent to 20.3 percent.

In real numbers, that decline amounts to 57,000 fewer kid smokers, and it means that 18,200 lives have been saved from a premature cigarette-induced death. It also significantly reduces health care costs to the state by approximately $1.3 billion.

Public health researchers say the cigarette tax increases helped these decreases, but the decline in youth smoking is also due to state resources devoted to teen tobacco prevention programs by the Health and Wellness Trust Fund and effective state and national ad campaigns.