Arkansas smokers and the double whammy -- UPDATE

The proposal to increase the tax on a pack of Arkansas cigarettes by 56 cents per pack is gaining steam, although the 3/4 threshold will still be tough to clear. The pressure has been on the legislature to finally agree on a funding mechanism for a statewide trauma system and other health-related proposals, and this is the only viable proposal with broad support currently. Passage would mean that the state tax on a carton of cigarettes would be $11.50, rather than the current $5.90. That's just the least of the worries for Arkansas smokers this week.

Today, the U.S. House voted to expand S-CHIP to four million more children. The funding for this project comes from an increase to the federal excise tax on cigarettes by 61 cents per pack. That would make the FET an even dollar per pack, or ten dollars per carton.

That means within a few weeks/months, Arkansans who smoke could see a pack of cigarettes increase by $1.17 per pack (or $11.70 per carton). The total tax on a carton of cigerettes would be $21.50 in Arkansas. I'm a firm believer that fewer smokers will significantly reduce our Medicaid obligations, but I've never bought the theory that a tax increase, even a sharp one, will cause many Arkansans to stop smoking. People quit smoking for reasons other than price. Maybe I'm a cynic, but I believe the main result will be a shift in sales from name brand cigarettes to generics. I guess that could be construed as a good thing if you're looking for a permanent stream of revenue to fund children's health insurance or a trauma system.

Update: The Mississippi House voted today to increase its cigarette tax from 18 cents to a dollar per pack.