A reader proposes a plan to have smokers recoup some of their cigarette taxes if they quit

Reader Dan Pecoraro says he has had this idea about cigarettes “for awhile.” Pecoraro’s idea is more intricate than a simple contractual agreement between individuals to quit smoking, and includes a public policy angle. Implementing it would probably be an expensive headache. Pecoraro knows that. Think of this as an idea in the conception stage.

Since one of the major societal problems associated with smoking is that the smokers will require expensive health-care down the road, I would propose that many of the taxes on cigarettes be funneled into accounts that correspond with the smokers that bought the pack. (I recognize the difficulty in administering this.) Smokers could log-in somewhere and see how much they have spent on cigarettes and how much of the “smoking health tax” they have accumulated.

But if they quit, they will become eligible for some of that tax back as long as they have proof that they have quit (assuming that such a test is available). As they stay smoke-free, they will continue to get bits of the tax back commensurate to actuarial tables for people that quit.

Example: Mr. Jones has smoked for 10 years and has accumulated $2,000 in cigarette taxes in his account. Mr. Jones quits and one year later, proves it. Actuarial tables suggest that after a year, Mr. Jones smoking-related ill-health-potential has decreased by 20 percent. Mr. Jones would get $2,000 x 20 percent (minus some administrative fee) back. One year after that, Mr. Jones proves he is still smoke-free. The actuarial tables suggests that he has diminished his smoking-related ill-health-potential by an additional 15 percent. He gets another check for $2,000 x 15 percent minus some fee.

So, Mr. Jones has an incentive to quit and to stay smoke-free year after year. Mr. Jones has visibility to all the money he has spent over the years. The taxpayer has funding to off-set the burden of smokers. The treasury gets the benefit of float. The treasury gets the additional benefit that many people won’t bother to claim their refund.

Everybody wins! (OK, lot’s of people win!)

2 Responses to “A reader proposes a plan to have smokers recoup some of their cigarette taxes if they quit”

  1. Tristan Says:

    This might fail on the assumption that smokers are more of a burden on healthcare. Just because smoking kills people does not necessarily make those people more expensive. We’ll all die someday, and mostly it will come with some healthcare costs. They might, in fact, cost less as they die ealier from diseases that cost less to treat overally prior to their death.

  2. Giving Up Smoking Says:

    Although it’s an admirable attempt to encourage people to stop smoking, this would never pass as a law. The overhead cost of such program could run into millions of dollars and there will be plenty politicians opposing it.

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