"taxation on cigarettes offsets the direct cost caused by smoking".

By about 25 percent. I calculated it a few years back combining the total US taxes on tobacco (state, federal and local) and comparing it to the Medicare expenditures on treating the percentage of lung cancer caused by tobacco smoking. This is actually pretty skewed against my claims since tobacco isn't always smoked so the tax from smoking is smaller than the total tobacco tax revenue, Medicare only pays for a portion of the lung cancer treatments (since not everyone uses Medicare but the private insurance data isn't as available), and this is only one albeit expensive aliment caused by tobacco smoking. So 25 percent is a generous estimate.

Long story short "sin taxes" don't actually pay for anything, it's a complete myth mostly promoted by people who want to use the product.