Economic and political influence on tobacco tax rates: a nationwide analysis of 31 years of state data.

OBJECTIVES

We evaluated state-level characteristics associated with cigarette excise taxes before and after the Master Settlement Agreement (MSA).

METHODS

We gathered annual cigarette excise tax rates for all US states and the District of Columbia, between 1981 and 2011, and matched each state-year tax rate with economic, political, attitudinal, and demographic characteristics, creating a data set of 1581 observations. We used panel data regression techniques to assess relationships between key characteristics and state cigarette excise tax levels.

RESULTS

Cigarette excise tax rates grew at more than 6 times the rate of inflation between 1981 and 2011; growth varied by time period and region. We found strong negative associations between Republican Party control of state legislatures and governors' offices and state cigarette tax rates. Tobacco production, citizens' attitudes toward taxes and tobacco control, and cigarette tax rates in neighboring states were significantly associated with cigarette tax rates. We found no association between unemployment and tax rates.

CONCLUSIONS

Future excise tax growth rate may depend more on the political leanings of state legislators, and the attitudes of the people they represent, than on economic circumstances.