The debate over the possibility of a significant bump in the cigarette tax moves to the front burner today. The Idaho Council on Indian Affairs is expected to take up the discussion, which includes a plan to increase the tax on a pack of smokes from 57 cents to $1.25. Such an increase would be expected to generate nearly $50 million, the proposed shortfall for Health and Welfare's Medicaid programs.
Idaho's Native American reservations are not required to uphold the tax but lawmakers are eager to get the tribes on board, because a bump in price could cause a dramatic disparity between the price of cigarettes sold on and off reservations.
According to the American Lung Association, Idaho's current cigarette tax generates approximately $47 million in revenue.
So why wouldn't a
73-cent 68-cent bump raise more than $50 million? Because the increase is also expected to cut down the amount of cigarettes sold in Idaho.
CORRECTION: The above revenue figure of $47 million is from fiscal year 2008. In fiscal year 2010, Idaho's current cigarette tax rate of 57 cents per pack generated $39.7.
According to the American Lung Association: "a $1.25 increase would bring in an additional $48.2 million in revenue, with an added $2.9 million generated by a proposed tax increase on all other tobacco products, even accounting for an expected reduction smoking rates, particularly among youth."