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February 22, 2024

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Quitters cause tax revenues to wane

By Martiga Lohn The Associated Press

BLOOMINGTON, Minn. – Roland Henkel quit smoking in September and has been doing the math ever since: a week added to his life. More than 2,100 Marlboro Lights he hasn’t smoked. And more than $400 he didn’t spend on cigarettes.

“It does add up,” said Henkel, 53. “You don’t think about it when you’re smoking so much.”

The state of Minnesota has been doing the math, too, and isn’t quite as delighted.

Because of quitters like Henkel, Minnesota’s tobacco tax revenue is expected to go into a gradual slide later this year – a drop that may grow even steeper with the expected passage of a statewide smoking ban.

Across the country, states are putting their treasuries under pressure by adopting smoking restrictions as well as higher cigarette taxes, which appear to be discouraging people from lighting up, as many health activists had hoped would happen.

State Sen. David Tomassoni, a Democrat who opposes a statewide smoking ban, said he worries about the lost tax dollars.

“The taxes on smoking are being used to fund education, they’re being used to fund health care, they’re being used to fund real things. Now, if we eliminate smoking, does it mean that those things go away?” Tomassoni said.

Opponents of smoking don’t mind if the take from smokers falls.

“The wonderful thing about tobacco revenues is when they go down, there’s less smoking,” said Eric Lindblom at the Campaign for Tobacco-Free Kids in Washington.

The downturn in revenue won’t necessarily cause states any immediate major hardship, since the decline is slow and cigarette taxes represent only a small portion of state budgets.

But up to now, they have been a reliable and politically expedient way of raising revenue to solve budget problems.

Sin taxes on things like cigarettes are “the most socially acceptable form of taxes you can raise,” said Bob Kurtter, a state budget watcher at Moody’s Investors Service.

Just over a fifth of U.S. adults smoked in 2005, down from about one-fourth a decade ago. Because of the downturn, states levied taxes on 2.8 billion fewer packs in 2005 than they did just five years earlier.

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