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Wisconsin smoking tax revenue down, but health benefits up, as more people quit, report says

By David Wahlberg

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    VALPARAISO, Indiana (madison.com/Wisconsin State Journal) — Wisconsin gets 2% of state taxes from cigarette sales, down from more than 4% more than a decade ago, but the drop in smoking during that time likely benefits the state through lower costs from cancer and chronic diseases, a new report says.

Following state and federal increases that put per-pack taxes at $3.53 in 2009, Wisconsin collected $644.3 million in cigarette taxes in 2010, 4.3% of all state taxes that year, according to the report from the Wisconsin Policy Forum.

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After a subsequent decline in smoking, stemming in part from an indoor smoking ban passed in 2010, the state had $482.4 million in cigarette taxes in 2022, 2% of state taxes.

Just 13.3% of adults in the state smoked in 2021, compared to 24.1% in 2000, according to the U.S. Centers for Disease Control and Prevention.

With smoking rates higher nationally among people on Medicaid, the state-federal program for people with low incomes, the lower rates of cancer, lung disease, heart disease and other conditions expected as a result of the decline in smoking likely benefits Wisconsin, the report said.

The state has a $6.6 billion projected budget surplus heading into the 2023-25 biennial budget drafting cycle. When the budget gets tight again, lower smoking-related costs could help.

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“Even if the state’s finances deteriorate, there is good reason to think the state has benefited from the tradeoff of lower tax revenues but improved public health and lower health care costs,” the report said.

Compared to Wisconsin, cigarette taxes are higher in Illinois and Minnesota and lower in Indiana, Iowa and Michigan.

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