Excise Taxes

State

Cigarette sales plunge since Florida's tax increase (FL)
Since Florida’s $1 per pack tax increase went into effect in July, statewide sales of cigarettes have dropped from over 100 million packs per month to around 78 million packs per month. Supporters of the increase believe smokers are quitting; opponents believe smokers are purchasing cigarettes elsewhere or are switching to cheaper tobacco products. Other factors, such as the federal tax increase and the impact of the economic recession, may also be contributing to the drop in sales. Click here to read more.

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National

As taxes rose, cigar makers supersized their stogies
In recent months, the cigar industry has seen a large increase in the production of large cigars, a reaction to tax rates that went into effect in April. Federal tax rates for little cigars rose from about 4 cents to $1.01 per pack; the rate increased from 5 to 40 cents per large cigar. The differential taxes have influenced cigar makers to change their production techniques to avoid paying the higher tax on the smaller cigars. Click here to read the full article.

Tobacco execs quickly find tax loophole
With the passage of the new children’s healthcare law, the federal tax on roll-your-own tobacco leapt from $1.10 to $24.78 per pound, thus threatening loose tobacco’s position as an inexpensive alternative to cigarettes. However, a loophole in the legislation allows the companies to remarket the tobacco as pipe tobacco, which is only taxed at $2.83 per pound. Anti-tobacco groups believe the move is also a way to evade the ban on flavored cigarettes, which does not apply to pipe tobacco. The Obama administration is working to clarify definitions of pipe and roll-your-own tobacco. Click here to read more.

PACT Act passed by Senate committee
The Senate Judiciary Committee voted unanimously to pass S. 1147, the Prevent All Cigarette Trafficking Act of 2009 (PACT Act). The bill, which aims to limit youth access to tobacco and prevent tax evasion by prohibiting online and mail order tobacco sales, will now proceed to a full Senate vote. The Coalition to Stop Contraband Tobacco is encouraging the Senate to pass the PACT Act. Click here for more details, or click here to check the bill’s status in the Senate.

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International

Japan considers higher tobacco taxes (Japan)
To help fund its domestic spending plan, Japan’s new Democratic Party of Japan administration is considering raising taxes on cigarettes by 10 yen per cigarette. Thus far, Japan has gone against global policy trends, resisting large tax increases on cigarettes and indoor smoking bans. Cigarette prices are far lower in Japan than in other developed countries; a pack of Marlboro Lights costs 320 yen, compared to 600-800 yen in the European Union. The government’s incentive to raise taxes to reduce smoking and lower heath care expenses may be offset by potential losses, as the government owns a 50% stake in Japan Tobacco, the world’s third largest cigarette company. Click here to read more.

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