The current federal tax on cigarettes is about $1 a pack, and President Obama’s proposal would increase that by an additional 94 cents. That hike would raise $75 billion to help subsidize preschool for children whose families who earn up to 200 percent of the federal poverty line, in a national effort to encourage more four-year-olds to enroll in pre-K programs. The tax increase would also raise $1.6 billion for the Early Head Start program and $15 billion for other programs.
The Campaign for Tobacco Free Kids has praised the policy, noting that higher tobacco taxes are a proven method of reducing smoking rates as well as a reliable revenue source. The advocacy group also points out that the majority of Americans support increasing taxes on tobacco products. In a statement released last week in regards to Obama’s forthcoming budget, the Campaign described the proposed tax as “a health win that will reduce tobacco use and save lives, a financial win that will raise revenue to fund an important initiative and reduce tobacco-related health care costs, and a political win that is popular with voters.” Total annual public and private health care expenditures caused by smoking are estimated at $96 billion.
But Big Tobacco’s powerful lobbying arm disagrees. “We oppose another federal tax increase on tobacco products,” a spokesperson for the Altria Group, the biggest lobbying organization representing the tobacco industry, told the Huffington Post on Friday. “[I]t is important to remember that the largest federal tobacco tax increase in U.S. history was enacted less than four years ago. We think it is unfair to single out adult tobacco consumers with another federal tobacco tax increase to pay for a broad, new government spending program.”
Although the tobacco industry characterizes universal preschool as a “broad, new government spending program,” expanding American children’s access to pre-K programs actually represents an investment with significant economic returns. Investing in early childhood education reduces future societal and economic costs in at-risk children’s lives. Some studies project that those investments eventually end up paying for themselves.
Of course, Big Tobacco has a long history of resisting tax increases on its products. Just last year, a proposed cigarette tax in California — which would have raised a much-needed $810 million for the state’s budget by imposing a $1 tax increase on tobacco products — was narrowly defeated after Big Tobacco lobbyists poured about $50 million into efforts to take down the bill.