The Florida House of Representatives has rejected a proposal to increase the state tax on cigarettes by $1 per pack in an effort to sustain the state’s Medicaid program and finance other proposed health improvement efforts.

The measure, introduced by state Rep. Jim Waldman (D-Coconut Creek), was defeated by a 70-42 vote in mid-January. The Florida Hospital Association and Safety Net Hospital Alliance of Florida had lobbied hard for the bill, which proponents estimated could have raised $700 million in tax revenue to finance Medicaid and other state health efforts, such as recruiting more clinicians to move to Florida.

Tax Dangers

Other observers applauded the defeat of the legislation and warned negative consequences would result from attempts to overcome revenue shortfalls by shifting a larger portion of the tax burden onto tobacco users.

John R. Graham, director of health care studies at the Pacific Research Institute in San Francisco, noted, “It is very dangerous for peoples’ health when hospitals depend on tobacco money for their revenues, and Florida should not allow hospitals to be distracted from patient care by an addiction to tobacco money.”

“Over the course of time, raising cigarette taxes does not decrease smoking,” said Peter Pitts, director of the Center for Medicine in the Public Interest. “Cigarettes are addictive, and such a law would encourage smokers to keep smoking under the guise of making positive strides for the health industry.”

Graham also pointed to the threat posed by tax-induced smuggling. “Punitive excise taxes on tobacco increase the volume of contraband cigarettes smuggled into a state, increasing the likelihood of violence,” he said.

‘Cycle of Dependency’

In addition to creating a cycle of dependency on tax revenue generated by the use of an addictive substance politicians claim to want to discourage, tobacco taxes also disproportionately affect lower-income individuals.

Laws such as the one defeated in Florida represent “a regressive tax that hits lower-income working people the hardest because they are disproportionately likely to smoke,” said Grace-Marie Turner, president of the Galen Institute.

“Revenues are likely to be much lower than the politicians expect, both because some people are likely to quit—a good thing—and because new black markets will emerge for cigarettes, as already happens in states that have raised their cigarette taxes,” Turner said. “The negatives of this tax clearly outweigh the positives.”

Instead of taxing an addictive drug, Turner said, “state governments should cut taxes,” thereby “stimulating economic growth and producing more revenue.”

Katie Flanigan (katiemf@uga.edu) writes from Georgia.