Do Cigarette Taxes Help or Hurt Poor Smokers?

Aug. 31, 2007 — -- A new study suggesting that tax hikes on cigarettes may be ineffective in reducing smoking among poor people is drawing fire from tobacco control and public health experts who call the research flawed.

The contentious report comes at a critical time, as Democrats in Congress strive to garner support for expansion of the State Children's Health Insurance Program (SCHIP) by $50 billion over five years. The plan would be funded largely by raising taxes on tobacco products.

In the study published in the current issue of the American Journal of Public Health, lead author Dr. Peter Franks and colleagues at the University of California, Davis, School of Medicine examined smoking among people in various socioeconomic classes over a 20-year period.

The study, funded by the university, found that while price increases historically were met with a concurrent decline in smoking across the board, more recent tax hikes — those occurring after the Master Settlement Agreement (MSA) with tobacco companies and the states in 1998 — corresponded with a trend in which the relatively wealthy quit smoking at a greater rate than their poorer counterparts.

Franks concluded that while tax increases may have helped in the past, that effect has pretty much disappeared. Moreover, he said, further tax hikes would place an undue burden on the poor — those hit the hardest by increased costs.

"There is essentially no effect associated with the increased price of smoking," he said. "Using pricing as a public policy is probably going to be less effective than it has been in the past."

But many tobacco control researchers disagreed with the conclusions of the study.

"I don't quibble with the data, but do with the conclusions," said Kenneth Perkins, professor of psychiatry at the University of Pittsburgh. "It is likely that lower-income smokers decreased their daily amount of smoking, as the authors concede they couldn't assess, thereby showing price sensitivity."

Some in the field pointed to other research that appears to contradict the conclusions of the new study.

"We've been tracking cohorts of smokers for the past 17 years and we see strong price effects," said Michael Cummings, chair of the Department of Health Behavior at Roswell Park Cancer Institute in Buffalo, N.Y.