Raise Cigarette Taxes To Reduce Smoking

IN a way, the staffs of Reps. Pete Stark and James Hansen hope that Congress, as it cuts income taxes, becomes desperate for new revenue. That would give their legislation imposing a huge jump in taxes on cigarettes a better chance at passage this year.

The California Democrat and Utah Republican were to introduce that bill yesterday. It would increase the excise tax on a pack of cigarettes from 24 cents to $2 and set a comparable tax hike on other tobacco products. The measure, according to its sponsors, would raise $17 billion a year -- at first. Over time, they project revenues would decline because the resulting price hike from around $2.25 a pack to $4 would reduce the number of youngsters taking up smoking by 30 percent or more.

Such a revenue decline would be ''great,'' vindicating the bill's basic antismoking purpose, as one staffer put it.

Mr. Stark's office looked into new research on the impact of a tobacco price hike on college students by Frank Chaloupka, an economist at the University of Illinois at Chicago, and Henry Wechsler, director of a college alcohol studies program at Harvard University, Cambridge, Mass. The two examined the smaller 75 cents per pack tax increase proposed in the Clinton administration's health bill. Had the measure passed and the extra tax been fully passed on to smokers, it would have reduced student smoking rates by approximately 30 percent. Overall student cigarette consumption would have fallen by almost two-thirds.

Further, they write in a National Bureau of Economic Research (NBER) paper, the measure would have resulted in substantial long-run improvements in health. It would have reduced the number of smokers ages 18 through 24 by more than 1.8 million.

''Using the relatively conservative [medical] estimate that one in four smokers will die prematurely as the result of smoking-related illnesses, the 75 cent increase would have reduced the number of premature deaths in this age cohort by over 450,000,'' they state. A similar pattern would likely occur among those under 18 years of age, they add. But somewhat smaller smoking reductions would occur among older age cohorts. Studies have found that older smokers are less sensitive to price changes.

Thus, the two conclude, increases in cigarette excise taxes ''are a very effective means of reducing cigarette smoking among youths and young adults. Given that almost no smokers begin smoking after 20 years of age, discouraging smoking in this age group is likely to lead to permanent reductions in cigarette smoking among all age groups.'' Evidence from three other studies, they note, indicates that the price responsiveness in the non-college student group could be even greater than that among college students.

To reach these conclusions, the authors used data from a nationally representative sample of 17,592 students attending 140 United States four-year colleges and universities, taken by Harvard in 1993.

Another recent NBER paper deals with the charge of some antismoking advocates that revenues from current tobacco taxes do not cover the costs to society of smoking. But W. Kip Viscusi, a Duke University economist, finds contrariwise that current cigarette taxes more than cover the costs of smoking that are not paid for directly by smokers themselves. The financial savings from premature mortality in terms of lower nursing home costs (involving Medicare and other government health expenditures) and reduced retirement pension costs (including Social Security) exceed the higher medical care, fire hazards, sick leave, and life insurance costs generated by smokers.

On balance, Mr. Viscusi finds, smokers save society money.

To encourage votes for their measure, Stark and Hansen have proposed that most of the $17 billion in revenues from their tobacco excise tax boost be used to cover part of the $22 billion deficit in Medicare funding. But $1.5 billion would go to medical research, $250 million to help tobacco farmers and their communities with the conversion to other crops, and another $250 million for pro-health, anti-tobacco education.

Will the bill pass? ''It will be difficult,'' admitted one Congressional staffer. ''But there are a lot of groups behind it.''