Tobacco Tax

Tobacco is still a big problem in Minnesota. 

Fourteen percent of the state’s population still smokes,1 and in 2014, 55,400 Minnesota kids used tobacco.2 The costs are high for Minnesota: $3 billion in excess health care costs,3 and 5,100 Minnesotans die each year from tobacco-related illnesses.4 In fact, tobacco kills more Minnesotans than alcohol, homicides, car accidents, AIDS, illegal drugs and suicide combined.5

What’s more, smoking-related diseases are regressive. The tobacco companies disproportionately target low-income and minority populations, and as a result, they suffer disproportionately from tobacco-related diseases such as emphysema and cancer. 

One of the most effective ways to encourage quitting and discourage people from starting to smoke is to raise the price of tobacco. The higher the overall price, the more significant health gains achieved. That’s especially true among youth and low-income people. As a result, those groups have the most progressive health benefit when tobacco prices increase.6

Minnesota is a leader in reducing tobacco use through legislation—including increased tobacco prices. As a member of the Raise It for Health Coalition, Blue Cross has played a significant leadership role in advocating for those laws for more than a decade.

Most recently, in 2013 the Coalition successfully advocated for a significant increase in the tobacco tax by emphasizing health equity and a health care cost rationale. On July 1, 2013, the new $1.60 per pack tax increase went into effect.

In the 12 months following implementation of the tobacco tax increase, Minnesota experienced a 24 percent reduction in cigarette sales, or 54.6 million packs, compared to the same 12 months of the previous year.While tobacco sales decreased, tax revenue went up 56 percent from the previous year, with Minnesota generating more than $204 million in new tax revenue.8

According to the Campaign for Tobacco-Free Kids and the American Cancer Society Cancer Action Network, the long-term health and financial impact of the $1.60 tax increase is significant. It will:9

  • Save more than 47,700 Minnesota kids from becoming addicted adults. 
  • Result in more than 16 percent decrease in youth smoking. 
  • Help more than 36,600 current Minnesota smokers to quit.
  • Save more than 25,700 Minnesotans from premature smoking-related deaths.
  • Save Minnesotans more than $1.65 billion in long-term health care costs. 

This wasn’t our only successful tobacco tax effort. In 2004, the Center joined with Blue Cross’ Policy and Legislative Affairs staff and a coalition of leading health organizations to develop a campaign to raise the price of tobacco. The primary effort was to conduct outreach to small businesses to rally support for a proposed tax increase bill. The effort also included conversations with lawmakers, public health stakeholders and grassroots organizations about the benefits of the bill. In 2005, a $0.75 health impact fee was implemented. 

Related links

1 Minnesota Adult Tobacco Survey, 2011 Update
2 Minnesota Department of Health, 2011. Minnesota Youth Tobacco and Asthma Survey, Dec. 2011.
3 Blue Cross and Blue Shield of Minnesota. Health Care Costs and Smoking in Minnesota. 2010.
4 Ibid.
5 Campaign for Tobacco Free Kids, Toll of Tobacco in the United States, http://www.tobaccofreekids.org/facts_issues/toll_us/ 
6 “State Cigarette Tax Increases Benefit Lower-income Smokers and Families” fact sheet, Campaign for Tobacco-free Kids, http://www.tobaccofreekids.org/research/factsheets/pdf/0147.pdf
7 http://tobacconomics.org/research/get-the-facts-minnesotas-2013-tobacco-tax-increase-is-improving-health/
8 Ibid.
9 http://www.tobaccofreekids.org/press_releases/post/2013_05_21_minnesota

  • Making Healthy Choices Possible for All Minnesotans

    The Center for Prevention at Blue Cross and Blue Shield of Minnesota tackles the leading causes of preventable disease -- tobacco use, physical inactivity and unhealthy eating -- to increase health equity, transform communities and create a healthier state.