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Be a quitter — but first give us your money
State discourages smoking but relies on cigarette taxes

By Phillip Rawls
Associated Press Writer

MONTGOMERY — It’s the ultimate mixed message: Alabama government spends money to encourage people not to smoke, but it relies heavily on cigarette taxes to fund prisons, mental health centers and other important functions of government.

Cigarette taxes are the third biggest tax source for the state General Fund budget. Alabama’s property taxes, which are the lowest in the nation, rank fifth.

“It’s amazing in this state that we have campaigns to encourage people not to smoke, but we rely more on cigarette taxes than property taxes,” said Rep. John Knight, chairman of the House Government Finance and Appropriations Committee.

Alabama is not alone. Cigarette taxes are big revenue producers in most states.

Alabama expects to take in $162 million this fiscal year. Georgia is looking at $247 million and Florida at $452 million. Michigan leads the nation at $1.1 billion in anticipated revenue, according to a recent survey by the Campaign for Tobacco-Free Kids.

Alabama also expects to collect $94.3 million this year from tobacco companies as part of the national tobacco settlement. Keeping that money coming in future years depends on keeping the companies profitable.

In late 2004, the Alabama Legislature and Gov. Bob Riley got together to raise the state cigarette tax from 16.5 cents a pack to 42.5 cents to generate more money for the General Fund budget that finances non-education programs.

No decrease after hike

Surveys by the state Department of Public Health found the tax hike didn’t discourage smokers. About one-fourth of Alabama adults were smoking before the tax hike and about the same amount after it.

“We were hoping to see a decrease in consumption, but we didn’t,” said Diane Beeson, director of the department’s tobacco prevention and control program.

Some states have raised their taxes over $1 per pack and that hasn’t reduced consumption. One economic study found that taxes would have to exceed $7 per pack before people would give up the addictive habit due to high taxation, Beeson said.

Alabama’s budget for helping people stop smoking is tiny compared to the revenue the state gets from cigarettes.

The budget, $682,000 for the current fiscal year, ranks 46th among the states and is 2.6 percent of what the Centers for Disease Control recommends that Alabama should spend for a first-rate program.

The budget funds educational programs and free nicotine patches for two weeks for those who want to try to quit smoking.

So far, 32 percent of those who have gone through the patch program have not returned to smoking one month after they completed the program, Beeson said.

While cigarettes are a big revenue source for the state, Beeson likes to flip the numbers around and look at how much smoking-related illnesses cost the state: an estimated $1.38 billion a year.

“When you look at what it costs us and what we get back, it’s a huge gap,” she said. “Our medical expenses far exceed our taxes.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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