A $1.00 cigarette tax would raise $174 million in new revenue. The legislation would direct 90% of the revenue raised to fund shortfalls in the state's Medicaid program. Currently, Mississippi's Division of Medicaid needs a deficit appropriation of $86 million to maintain services for FY 08 (ending June 30, 2008). To continue current service levels, an additional $168 million is needed to fund Medicaid through FY 09.  The other 10% of revenue generated would be earmarked to fund the state's trauma system.

The measure runs counter to the only other alternative being floated to address the shortfall-a tax on hospitals. The so called "bed tax" would place many rural hospitals in a deep financial burden and the costs of the tax would likely be passed on to patients.

It makes more sense to tax a product that puts people in the hospital and costs the state millions rather than taxing establishments that take care of the sick and ill.

A $1.00 cigarette tax increase is also a long-term healthcare investment that will save Mississippi nearly over a billion dollars as a result of 46,000 children alive today never becoming addicted to cigarettes.