By no means would I ever encourage my teenage daughter to smoke, but before we call for higher cigarette taxes to discourage teen tobacco use (“Raise cigarette tax to curb teen use,” Opinion, Nov. 20), we should have a conversation about what higher cigarette taxes do — and don’t do.
First, let’s look at how much we get from cigarette taxes and payments. Each year, “Big Tobacco” pays $10 billion to the states under 1998’s “Master Settlement Agreement.” These funds are supposed to be used to help smokers with cessation programs, promote anti-smoking campaigns targeted to youth, and coordinate educational programs related to tobacco-associated diseases.
While Georgia’s share of the agreement last year was $139 million, only 1.3 percent of that amount — $1.8 million, according to the Campaign for Tobacco-Free Kids — was actually spent on prevention. When 99 percent of the dollars collected are not being used for the intended purpose, a thorough evaluation of the current model should be made before we consider increasing taxes.
Georgia retailers will also be impacted by a cigarette tax increase, especially those in border cities like Columbus, Augusta and Savannah. We know higher prices drive sales to lower-price areas. If patrons cross borders looking for better prices on fuel and tobacco, they may stay there to fill other shopping needs. We must take into account the impact of the loss of all these sales, including job losses, store closures and decreased sales tax revenues.
While it is true Georgia’s tobacco tax is low compared to national averages, we should compare ourselves only to the states next door to us, where sales can and will cross the border. It is far more important and appropriate to look at neighboring states’ tax rates, which are also low.
Another consideration is that artificially high tax rates often create black markets. More than half of all cigarettes in New York, and about one in three cigarettes in California, have been smuggled in.
While individuals often drive miles to save a few cents on fuel and tobacco, there is one place pricing doesn’t seem to impact sales. Starbucks has a very loyal, very young customer base; 40 percent of its customers are 18 to 24 years old. For these individuals, price doesn’t matter. I can assure you my teenager doesn’t care how much of her allowance she spends on Starbucks because it’s cool, it’s fun to drink and it makes her and her friends feel “more grownup.”
This is the place where the cheapest item is a plain cup of coffee for about $3, and yet these kids choose far more costly options.
What should Georgia do? We should continue to reduce the “cool factor” of smoking by earmarking a greater percentage of existing taxes to continue the “it’s not cool” message with teens, as has always been intended. The earlier we educate our youth, the less we have to spend in the future. Asking Georgia retailers to take on the burden of higher taxes is definitely not cool.
Angela Holland is vice president of association services for the Georgia Association of Convenience Stores.
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