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Saturday, April 27, 2024

Study: Ban on menthol cigarettes will leave Missouri with an $88 million shortfall

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Boesen

Boesen | Tax Foundation

If the U.S. Food and Drug Administration follows through on its plan to issue a ban on menthol-flavored cigarettes and cigars, the state of Missouri could face a revenue shortfall.

“Menthol cigarettes make up nationwide about 34% of the cigarettes that are sold in this country so it takes away a huge chunk of the legal market,” said Ulrik Boesen, a senior policy analyst with the Tax Foundation. “All states tax the sale of cigarettes and the revenue that states raise from this are either allocated to spending priorities or are put into the general fund.”

The projected revenue loss for Missouri alone is $88,549,975, according to Tax Foundation analysis.

“In the case of Missouri, $35 million every year must be deposited into the early childhood development education and care fund, for instance, and if you start to see those funding mechanisms dwindle out, you're going to have to backfill with other tax revenue,” Boesen told the St. Louis Record.

Boesen estimates in his report that a federal menthol cigarette ban will cost governments $6.6 billion nationwide.

“Groups like the ACLU and Al Sharpton are against the ban because they're worried about introducing another war-on-drugs-like initiative when it comes to enforcing this ban on menthol cigarettes like a ban on cannabis has been enforced,” Boesen said.

A University of North Carolina study found that about 80% of African American smokers use menthol cigarettes.

The ACLU estimates that marijuana use is largely the same between black and white people however black people are 3.73 times more likely to be criminally arrested for possession than whites.

“Our concern is that a ban will have an adverse impact on revenue generation at federal, state and sometimes local levels but if you then don't get rid of the consumption, you're left with all the costs associated with smoking without the ability to tax the sale, which is raising some revenue to offset the cost,” he said. “We're also afraid that increased illicit trade might be the result of this.”

Under the ban, menthol cigarettes would not be allowed to be manufactured in the U.S.

"You would have to bring them in from other countries where there is no ban," Boesen added. "You would have to have illicit manufacturing. It's not particularly hard to make a menthol cigarette out of a normal cigarette. Basically, all you need to do is introduce mental aroma to an airtight room where you have normal tobacco. So, you could imagine, some operations would do that."

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