New federal tobacco tax should save Tennessee $1.1 billion..

April 2, 2009 - New federal tax on tobacco products that went into effect Wednesday, April 1, 2009 is expected to save the state $1.1 billion in health care costs and save $241 million for TennCare. Smoking declines will save the state $1.1 billion in associated health care costs and $241 million for TennCare, the state’s Medicaid program.

The federal excise tax on cigarettes rose yesterday from $0.39 to $1.01 per pack. Taxes on chewing tobacco rose from $0.195 cents per pound to $0.50.

Additional funds raised will benefit the State Children’s Health Insurance Program, which provides insurance for children and their families if they make too much for government assistance but not enough to afford health care coverage.

Officials from the Tennessee Department of Health (TDOH)claim the new taxes will help 30,200 Tennessee quit using tobacco products, which will produce myriad ancillary benefits. TDOH claims the move will save 23,100 smokers in the state from smoking-related deaths.

The new tax is expected to help more than 1 million quit nationally and produce $44.5 billion in health care savings, including $7.5 billion for national Medicaid
programs.

Reference: New tobacco tax should save Tennessee $1.1 billion, Memphis Business Journal, 4/2/2009.