TOBACCO TAX
Jill Collins, Julia Hecht,
Lorraine Lick, & Dawn Magee
PROBLEM IDENTIFICATION
Kansas budget shortfall estimation after one billion
dollars in budget cuts:
 $500 million dollars (Shields, 2010, in press)
 Recession recovery period
 Historically: state governments in the past have
raised cigarette and tobacco taxes to increase state
revenue.
 January: Cigarette and Tobacco Tax hike Proposed

BACKGROUND
Social

Families working with fewer resources

Further stressing lower socio-economic population

Reduction in youth smoking

Decrease in Kansas residents who consume
tobacco products (youth, elderly, low income
residents)
BACKGROUND
Economic
Tobacco related healthcare costs = $927 million
annually
 State Medicaid expenditures = almost $200 million
annually
 Benefits tobacco tax = potential decrease in
healthcare costs with accumulated long term
savings
 Increased financial burden on families = either
decreased number of smokers or increased
incidence of alternative ways of acquiring tobacco

BACKGROUND
Ethical
Improved health and decrease healthcare costs
 Targeting “mom-and-pop” owned stores
 Targeting lower income families

BACKGROUND
Legal & Political Factors
March 2010 – Senate Tax Committee reviewed
legislation and addressed SB 516 which would
increase tobacco tax 55 cents per pack
 National average of tobacco products and retail
sales tax is $1.34
 Kansas Governor Mark Parkinson State of the
State Address 2010 – supported enacting public
smoking ban, raising cigarette & tobacco taxes to
reduce teen smoking and in order to generate
revenue

BACKGROUND
Legal & Political Factors

Advocates





improves health & safety of population
Tobacco industry accountability for illnesses and
deaths
Prevents youth from smoking
Generates revenue to help subsidize healthcare
Helps develop education programs that can reduce
number of Kansas smokers
BACKGROUND
Legal & Political Factors
 Critics



Infringes on personal freedom
Discriminatory – unfairly targets smokers,
industries, and the poor
Potential for increased crime – smuggling over
borders and access via internet/mail order
ISSUE STATEMENT
 Should
the state government increase
tobacco taxes to resolve Kansas revenue
deficits?
STAKEHOLDERS
 Insurance
Providers
 Healthcare Professionals
 Employee agencies providing health
insurance
 Governmental agencies
 Tobacco farmers
 Tobacco industries
 Consumers
 Small business owners
POLICY OBJECTIVES
3
benefits of raising tobacco taxes in
Kansas

Additional monies added to state coffers

Decreased number of smokers

Reduced healthcare costs of treating
tobacco related illnesses
ALTERNATIVES

Do Nothing/Status Quo Option


Combined Change Option:


Continue with tax cuts and planned cigarette and
tobacco tax hikes
Shift the burden of a tax increase from solely tobacco
products to include other products and current
existing taxes that share burden of higher taxes with
other all income bracket groups
Responsibility Option:
 1998 Kansas awarded portion of Master Settlement
Agreement from 4 main tobacco companies –
Currently state is pending less than 10%
recommended by CDC on prevention programs.
EVALUATION CRITERIA
1. Cost
2. Benefits
3. Effectiveness
4. Political Feasibility
ANALYSIS OF POLICY ALTERNATIVES

Each policy alternative was evaluated utilizing the
evaluation criteria outlined in the previous slide





Cost
Benefits
Effectiveness
Political Feasibility
Pros and Cons were identified and the following
table was drawn up to compare the options in an
easy to read format.
COMPARISON OF POLICY ALTERNATIVES
Alternative 1
Alternative 2
Alternative 3
Do
Nothing/Status
Quo Option
Combined
Change Option
Responsibility
Option
-
+
+
+/+/-
++
++
++
+
-4
2
7
Criteria
Cost
Benefits
Effectiveness
Political
Feasibility
Score for
Alternative
SUMMARY/RECOMMENDED POLICY

Doing Nothing/Status Quo


Combined Option


clearly not an option continuation with this option will
result in higher deficits and further budget cuts in key
community areas
appears logical, however, there is questionable
effectiveness with potentially alternatives of acquiring
products in a competitive market with easy access to
several states
Responsibility Option

most logical with highest comparison scores with
funds that are already in existence.
REFERENCES

Americans for Prosperity. (2010, April, 6). The economic impact of cigarette tax increases in
Kansas. AFP Kansas Newsroom. Retrieved from http://www.americans forprosperity.org/
economic-impact-cigarette-tax-increases-kansas

Convenience Store News (2010, March, 17). Senate passes PACT Act. Retrieved March 29,
2010, from http://www.csnews.com/csn/cat_management/tobacco/ article_display.
jsp?vnu_content_id=1004076900

Executive Summary (2009, December, 9). Campaign for tobacco free kids. Retrieved from
http://www.tobaccofreekids.org/reports/settlements

Gever, M. (2007, August, 6) Tobacco tax increases: Pros and cons. Retrieved from
http://www.ncsl.org/default.aspx?tabid=1477

Governor of the State of Kansas: Mark Parkinson (2010, January, 11). State of the State 2010.
[Press Release]. Retrieved from http://governor.ks.gov/component/content/article/47/553011110-state-of-the-state-address.




Kansas Department of Health and Environment. (2007). Tobacco use in Kansas: 2007 status
report. Retrieved from http://www.kdheks.gov/tobacco/download/TobaccoReport.pdf
Kansas Department of Revenue. (2008). Annual report. Retrieved from http://www.ksrevenue.
org/pdf/forms/08arcomplete.pdf
Kansas Department of Revenue. (2010). Kansas cigarette and tobacco products act: KSA
chapter 79, article 33. Retrieved from http://www.ksrevenue.org/abcCigStatutes.htm
Mason, D., Leavitt, J., & Chaffee, M. (2007). Policy and politics in nursing and healthcare. St.
Louis: SaudersElsevier.