LOUISVILLE, Ky. — In the summer of 2018, the cost of cigarettes in Kentucky went up 50 cents per pack due to an increase in state tobacco taxes. One year later, it was clear that the tax hike had done its job.
According to state government, in fiscal year 2019, 35 million fewer packs of cigarettes were sold in the commonwealth than in the year before.
“That's a 10% decline, so we can see that even in our own state, raising the price reduced the usage,” said Allison Adams, vice president of policy at the Foundation for a Healthy Kentucky.
Now Kentucky, which has the nation's second-highest rate of adult smoking, according to the CDC, has a chance to reduce tobacco usage even further, thanks to proposed tax increases in President Biden’s Build Back Better bill.
But Gov. Andy Beshear has come out forcefully against the tax increases, writing a letter to President Biden opposing the taxes and publicly criticizing them as “unfair” and “inexplicable.”
“First of all, I’m against smoking,” Beshear said at his Sept. 30 press briefing when asked about his opposition to the taxes. He then criticized the portion of the bill that would increase taxes on snuff, saying that it targets a product that is “grown almost exclusively in Kentucky.”
“It’s going to cause significant, severe, and very quick job loss in Kentucky,” he said of the tax hike, which would see taxes on snuff increase by 1,677%.
The legislation would also double the federal tax on a pack of cigarettes from $1.01 to $2.02. It would raise the tax on chewing tobacco more than 2,000%, from $0.50 cents per pound to $10.74 per pound. It would also establish the federal government's first ever taxes on e-cigarettes.
In his letter to Biden, which a spokesperson sent to Spectrum News 1, Beshear lamented the potential economic impact of the tax legislation.
“Kentucky’s agricultural sector will bear a costly and outsized burden under the current tobacco excise tax proposal in Congress,” Beshear wrote. He cited statistics being circulated by The National Association of Tobacco Outlets, which lobbies on behalf of tobacco retailers, suggesting that the taxes could have a $65 million economic impact in Kentucky, including the loss of 295 jobs, $11.6 million in lost wages, and a decrease in $28.8 million state and local revenue.
The economic impact of reducing smoking in Kentucky could be more significant though, Adams said. Each year, Kentucky spends $1.9 billion in health care costs related to smoking, according to the Campaign for Tobacco Free Kids.
Adams said that number dwarfs the size of the value of the tobacco crop in Kentucky, which she said is $237 million. “Increasing the prices of tobacco products is not a new concept as an evidence-based approach for reducing the purchasing of nicotine products,” she said.
Kentucky’s own recent history along with data from other states has consistently shown that increasing the price of these products leads some current tobacco users to quit and discourages young people from ever trying them.
That would be especially welcome in Kentucky, said Mahak Kalra, chief policy analyst for Kentucky Youth Advocates (KYA).
“Youth tobacco use, specifically e-cigarettes or vaping, is a significant health threat to the well-being of future generations,” she said. “Nearly 90% of tobacco users first try tobacco products by the age of 18.”
It’s a problem that may have gotten worse in the past year and a half. In early 2021, a survey of middle- and high-school students in Kentucky found that many believed the pandemic increased vaping among their peers.
Higher taxes on tobacco products can be especially effective at dissuading young people form trying them. “The youngest Kentuckians are definitely more price sensitive,” Kalra said.