Analyses Show Smoking’s Impact on Businesses, Outcomes of Cigarette Tax Increase

Indiana has the eighth-highest rate of smoking in the country, and 11,000 Hoosiers die each year from smoking-related diseases. Annual healthcare expenditures directly caused by tobacco use in Indiana equal $3.4 billion. While the health implications of smoking cigarettes are well known, what’s lesser known are the smoking-related costs Indiana businesses pay every year.

From extra absenteeism and unsanctioned smoking breaks to excess healthcare costs, employees who smoke cost Indiana employers $3.1 billion annually, which serves as an additional “tax” for Indiana businesses equaling 1.7% of total wages. In Marion County alone in 2022, businesses paid nearly $609 million in this hidden “smoking tax.”

To lessen the impact of these hidden taxes and make Indiana more economically competitive, it is critical to decrease the smoking rate. One method proven most effective is to raise the cigarette tax, of which Indiana’s is currently the 12^th-lowest in the country. If Indiana’s per-pack cigarette tax increased by $2:

The findings in these two reports make it clear Indiana’s high smoking rate undermines the success of the business community and show how the state could decrease the smoking rate while also reducing healthcare costs and generating revenue at the same time.