Excise Taxes

National / Reports

Enough of the puff: tax may cut smoking rates
Public health experts are predicting that the increase in the federal cigarette excise tax that goes into effect on April 1, 2009 will encourage many American smokers to quit. Danny McGoldrick, Vice President of research for the Campaign for Tobacco-Free Kids, is forecasting that the tax will encourage over 1 million smokers to quit and prevent 2 million children from becoming smokers. While health advocates are celebrating the cigarette tax hike, the tobacco industry is bracing for a projected 10% decrease in cigarette sales. Click here to read more.

States look at tobacco to balance the budget
Lawmakers in states that have not increased their tobacco taxes in years are now considering tax hikes to cover budget shortfalls. Even southern states like Mississippi, Georgia, North Carolina, and South Carolina that have traditionally had strong economic ties to the tobacco industry are weighing tobacco taxes as an economic solution. The Arkansas cigarette tax nearly doubled to $1.15 per pack recently, and Kentucky’s tax will double to sixty cents on April 1. Tobacco companies maintain that states should not rely on revenue from tobacco taxes, as tobacco sales typically drop following a tax increase. However, University of Illinois – Chicago economist Frank J. Chaloupka notes that there have not yet been any examples of states losing money as a result of a cigarette tax hike. Click here for more information.

Granholm wants tax to snuff tobacco habit, help budget (MI)
Michigan Governor Jennifer Granholm has proposed doubling the state tax on loose tobacco, cigars and snuff to help balance the state’s budget. These products are considered by some to be affordable alternatives to cigarettes because they are not taxed at the same level as cigarettes. This measure will close the gap between cigarette and other tobacco prices, an approach that has the potential to decrease tobacco use. The proposed tax increase would not increase Michigan’s cigarette tax that is currently at $2 per pack. If the proposal is approved, the state tax on non-cigarette tobacco products would increase from 32% to 64% of the wholesale price. Click here to read more.

Miss. Lawmaker promises cigarette tax compromise (MS)
The Mississippi House has passed a proposal to increase the state’s cigarette excise tax by $1, while the Senate passed their own version of the bill that would increase the tax by 49 cents. Amid legislators’ concerns about the economic impact of the Federal excise tax increase, a compromise on the state cigarette tax is still being negotiated. Despite the competing opinions, House Ways and Means Chairman Percy Watson expressed confidence that the two chambers would reach an agreement. At only 18 cents per pack, the current Mississippi cigarette excise tax is the third lowest in the nation. Click here to read more.

NYACS fights ‘obscene’ retail tax fees (NY)
A recent proposal by New York Governor David Paterson to increase the state’s annual registration fee required of retail outlets to sell tobacco products provoked members of the New York Association of Convenience Stores (NYACS) to rally against the fee hike. The fees increased from a mere $100 per store to $1000, $2500, or $5000 depending on the store’s gross sales. Designed by public health advocates and backed by the state health commissioner, the intent behind raising the fee is to significantly reduce the number of retail outlets selling tobacco products. Opponents of the hike believe that registration fees should reflect state administrative costs and not sales or business volume. Click here to read more.

Ohio tax hike on non-cigarette tobacco proposed (OH)
In Ohio, cigarettes are currently taxed at 55% of the wholesale price while non-cigarette tobacco products are only taxed at 17% of their wholesale price. State Representative Tyrone Yates has proposed increasing the tax on non-cigarette tobacco products to match the tax of cigarettes. Yates’ proposal is an attempt to help the state increase revenue during tough economic times. Click here to read more.

International

China, thank you for smoking
Chinese smokers currently account for one-third of the world’s tobacco users. Smoking is considered a rite of passage for Chinese men and 70% of Chinese men smoke. The government-owned Chinese National Tobacco Company (CNTC) is the largest tobacco company in the world, and the tobacco industry provides 8% of the government’s revenue. Despite the entrenchment of tobacco use in the Chinese culture and economy, health officials are pushing the Chinese government to make efforts to decrease tobacco use. China’s tobacco tax is relatively low compared to other countries, yet the government has hesitated to raise the tax because of worries over lost CNTC profits. A recent report supported by the National Institutes of Health and the Bloomberg Foundation recommends a tobacco tax increase in China of 1 yuan (US $0.15) per pack of cigarettes, estimating that this would save around 13 million lives and generate almost $9.5 billion in additional revenue. Click here to read more.

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