Skip to comments.FTC Report Shows Big Decline in Cigarette Sales after 2009 Federal Cigarette Tax Increase
Posted on 09/21/2012 4:47:21 PM PDT by Drango
WASHINGTON, DC A report issued today by the Federal Trade Commission shows that the number of cigarettes sold and given away in the United States fell by 10 percent in 2009, one of the biggest declines on record. This decline shows the impact of the 62-cent increase in the federal cigarette tax that took effect April 1, 2009, and is powerful confirmation that cigarette tax increases are one of the most effective ways to reduce smoking.
The 2009 decline in cigarette sales is the second largest on record since the FTC began reporting sales data in 1963. The only larger decline, 10.3 percent, was in 1999, when tobacco companies significantly increased cigarette prices to pay for the 1998 legal settlement with the states. The evidence couldn't be clearer: When cigarette prices go up, cigarette sales go down.
Other recent reports have also shown that the 2009 federal cigarette tax increase significantly reduced smoking. According to a University of Illinois at Chicago study published in April, youth smoking fell 10 to 13 percent immediately after the tax increase took effect. The researchers estimated that the tax reduced the number of youth smokers by at least 220,000 in the first two months alone. Even while reducing smoking, the tobacco tax increase raised more than $10 billion in just the first 12 months to help fund expansion of the State Children's Health Insurance Program. The federal tobacco tax increase has been the health win and the revenue win expected and should spur elected officials across the country to increase tobacco taxes.
The FTC today also reported the following data on tobacco marketing:
Cigarette marketing expenditures in the U.S. declined from $9.94 billion in 2008 to $8.53 billion in 2008 and $8.05 billion in 2010.
After increasing by 277 percent between 1998 and 2008, smokeless tobacco marketing decreased from $547.9 million in 2008 to $492.1 million in 2009 and $444.2 million in 2010.
While it is a positive step that tobacco marketing has declined, the tobacco companies continue to spend huge sums to market their deadly and addictive products. Counting both cigarette and smokeless tobacco marketing, the tobacco companies spent $8.5 billion on marketing in 2010 more than $23 million each day and nearly $1 million every hour. Cigarette makers continue to spend the bulk of their marketing budgets more than 80 percent on price discounts that make cigarettes more affordable and appealing to price-sensitive kids
Tobacco companies spend far more to market tobacco products than states spend to prevent and reduce tobacco use. In fiscal year 2012, the states spent $456.7 million on programs to prevent kids from smoking and help smokers quit. That means tobacco companies spend more than $18 to market tobacco products for every $1 states spend to reduce tobacco use.
The continuing high level of tobacco marketing show why we need aggressive action by all levels of government to stop the tobacco epidemic. The states should increase tobacco taxes and restore funding for tobacco prevention programs that have been slashed by 36 percent in recent years. At the federal level, the Food and Drug Administration must effectively exercise its authority over tobacco products and marketing, the health care reform law's expansion of coverage for smoking cessation services must be implemented, and the Centers for Disease Control and Prevention should continue the highly successful anti-tobacco advertising campaign it launched this year.
Tobacco use is the nation's number one cause of preventable death, killing more than 400,000 people and costing $96 billion in health care bills each year. These deaths and costs are entirely preventable if elected officials at all levels fight tobacco use as aggressively as the tobacco companies market their deadly products.
An increase in price, reduces demand.
Total cigarette sales have increased when you include those sold on the black market.
The electronic cigarettes are going to effect the sales also. One gets the nicotine, but not the smoke. I use them now, and haven’t smoked in over a year. I am not sure how the tax’s will be counted on them.
Susie. If you believe that I have some nice SWAMP LAND in Florida you will be interested in.
Two words. Black market.
Next lesson: price elasticity of demand.
Third lesson: price elasticity of supply.
Someone learned those advanced lessons:
“Cigarette contraband has become so profitable that it is attracting organized crime and former drug contrabandists, ....”
Governments also clear more 'profit' from cigarettes than the tobacco companies do.
Some of us just went to less taxed forms of tobacco.
The 2nd to last paragraph is pure liberalism, dripping with dictatorial demands.
Or one acronym: RYO
I switched after hearing the super-tax on cigarettes was on the way. Then loaded way up after hearing the super-tax on RYO tobacco was on the way - and before my favorite supplier (D&R) got out of the business. Still rolling.
How many murders are committed due to the War On Tobacco?
I have to laugh that the same people who say increasing taxes on cigarettes reduces smoking but increasing taxes on income has no economic effect
Kick the habit! Become a CONSERVATIVE.
No, no, no, that never happened. For that to have happened would mean that Obama raised taxes on the poor.
Must hate free men that chose for themselves.
Smoke 'em if ya got 'em.
In this case, the taxes just drove people to other methods and government won’t accept the revenue loss laying down. They’ll just hike the taxes somewhere else.