Jump to full article: Milwaukee (WI) Journal-Sentinel, 2009-10-10
Author: Rick Romell of the Journal Sentinel
Intro: While Ahmad, Mussina and the other Wisconsin merchants suffer financially, the tax increases have significantly boosted the revenue of a cash-strapped state, and probably are deterring a lot of smoking.
The retailers say price increases won't stop smokers, but researchers say otherwise, and the potential savings in health care costs are enormous.
On average, according to University of Illinois at Chicago economist Frank J. Chaloupka, every 10% increase in cigarette prices reduces demand by about 4%.
That would suggest that reduced overall smoking accounts for a significant portion - perhaps more than half - of the decrease in cigarette sales following Wisconsin's tax increases.
There's no data yet on the effects of the most recent increase, which took effect Sept. 1. But tax collections before and after the $10-a-carton boost on Jan. 1, 2008, show a dramatic impact.
From fiscal 2007 to fiscal 2009, revenue to the state nearly doubled, to $551 million. But cigarette sales fell by 19% - from 38.5 million cartons in fiscal 2007 to 31.1 million in fiscal 2009.
That's more than a billion fewer cigarettes sold here, and Chaloupka believes most weren't replaced with smokes bought elsewhere.
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