Cigarette Taxes: What it Really Costs Us

Tue, 11/22/2016 - 3:30 PM | by Tiffany Kerrigan

By: Tina Jacob

Earlier this year, the Indiana General Assembly passed House Bill 1001. This bill originally proposed increasing cigarette tax by $1 to help fund road repairs all across Indiana. Unfortunately, it passed without the $1 cigarette tax increase but within the next coming months you will start to see another push to increase cigarette taxes.

On the surface, raising taxes may seem like a bad idea. But when delving deeper into the facts, regarding cigarette taxes, it can do a lot of good for public health.  Currently, Indiana’s cigarette tax is less than $1 at $0.995; one of the lowest state taxes on a pack of cigarettes compared to all the surrounding states.  Indiana is second only to Kentucky whose taxes sit at $0.60. Below is a map on how we compare to our other Midwest neighbors.


Cheaper cigarettes mean higher smoking rates. For example, 23% of Hoosiers smoke; which is much higher than the national average of 15%. Research has shown that smoking leads to an increased risk for several diseases including lung cancer, heart disease, and oral cancer. Indiana spends about $2.93 billion in annual health care costs for smoking related illnesses. This can be further divided to show that you, as a resident of Indiana, will spend roughly $982 a year through taxes to help smokers across the state receive treatment for illness caused by their smoking addiction.

So how does raising taxes help us? Well it’s been shown that for every 10% increase in price, the smoking rates among youth decrease by 7%.  This is because teenagers and young adults are extremely influenced by price and less likely to purchase tobacco products if they cost more. Fewer smokers mean less money you, as a Hoosier, would have to pay to help support healthcare costs for smokers who get ill due to tobacco use.

One of the biggest arguments you hear is “if you raise taxes here in Indiana, people will just drive over to Kentucky to purchase their cigarettes for cheaper.” This argument was used when Illinois sought to increase their own state taxes saying that people would drive over to Indiana to purchase cheaper cigarettes. Indiana saw no significant increase in sales of cigarettes, in fact, Illinois saw a huge increase in revenue because of the tax. Every state that has raised their cigarette tax saw rates of smoking decrease and revenue increase. With a higher revenue, coupled with lower healthcare costs, states now have a larger pool of money to pull from to help fund necessary programs and repairs to increase the quality of life for their residents.

So if you would like to help support the cigarette tax increase, let your voice be heard! Call your local state legislators and tell them you support the tax increase and let’s work together toward a healthier Indiana.