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What Have They Been Smoking? Tax Supporters versus the Truth

IB-2004-Q (July 2004)
Author: Linda Gorman

PDF of full Issue Backgrounder
Scribd version of full Issue Backgrounder

Amendment 35 would raise the state tax on cigarettes and tobacco products. The money would be redirected to groups working to expand enrollment in Medicaid and CHP, to anti-tobacco programs, and to community health centers.

The statements in bold are from the Citizens for a Healthier Colorado Amendment 35 backgrounder, published in September 2004 and prepared for Colorado editors, publishers and reporters. Citizens for a Healthier Colorado supports the passage of Amendment 35.

High taxes do not drive smokers to buy their cigarettes in other states or on the black market. Though some may try to buy out of state, “those cross-order purchases generally fade as smokers go back to their usual habit of buying cigarettes at the corner store.”

Or may be to someone around the corner selling black market smokes. In England, an island with the second highest cigarette taxes in the world, surveys of empty cigarette packs in the litter left after soccer games show that in 1998/1999 only 5 percent of empty packs had not had tax paid on them. By 2001, rates were as high as 41 percent. 1 American smokers can also purchase from Indian reservations and international retailers via the internet. A 2002 population-based New Jersey telephone survey found that internet cigarette purchases grew from 1 percent in 2000 to 6.7 percent in 2002.2

“Because Colorado’s tobacco tax rate is so low currently, we are the source for the black market in other states.” Amendment 35 would bring our taxes in line.

Perhaps Amendment 35 advocates can explain why the U.S. General Accounting Office reports that cigarettes have been smuggled into the U.S. from China, Malaysia, Korea, Russia, Latvia, Mexico, Brazil, Paraguay, Uruguay, and the Philippines, even though Colorado is much more convenient for an American traveler. 3

“Smoking-attributable productivity losses…[are] $218 per each pack of cigarettes sold..”

If this is true, a pack a day smoker produces productivity losses of $79,570 a year. In 2002, very high estimates of annual productivity losses were published in the federal government’s Morbidity and Mortality Weekly Report. The federal figures were $2,278 and $1,193 for male and female smokers respectively— vastly less than the preposterous figure touted by Amendment 35 advocates. 4

Community Health Centers provide low cost health care. Community Health Centers charge the taxpayers a very high rate. Although Community Health Centers receive lavish federal subsidies, the Centers still charge Colorado Medicaid roughly $130 for a basic visit. 5 In contrast, Colorado Medicaid pays private physicians just $27 for the same service. Private urgent care centers that take cash-paying patients charge only $100. One physician, whose office is in a community but who is not a “community health center” (because he pays his own way), estimated that his local community health center charged twice as much as he did, even to the most generous private insurance. Community Health Centers are cheap for patients, but extremely expensive for taxpayers, especially compared to other physicians who provide health care for poor people.

“CHP+ has provided comprehensive health care
coverage to nearly 100,287 children who previously
had no access to other coverage…”