Excise Taxes

State

Lawmaker wants to close cigar loophole in tobacco tax (IA)
State Senator Matt McCoy of Iowa is seeking to close a loophole in the state’s tobacco tax laws in which filtered cigars, or cigarillos, are taxed at a much lower level than cigarettes. Including taxes, a pack of cigarettes can cost up to $5, while a pack of cigarillos costs as little as $1.25, prompting some smokers to switch to the cheaper option. To avoid the higher cigarette taxes, some manufacturers increased the weight of their cigarillos so they would be classified as cigars instead of cigarettes. McCoy wants to push legislation that would tax cigarillos on the same scheme as cigarettes, and also wants fellow lawmakers to examine the effect higher cigarette taxes have had on sales of loose tobacco, another minimally-taxed product. Click here to read more.

High NH cigarette tax yields rising sales in Maine (ME)
After cigarette sales in Maine had fallen steadily for over 20 years, the number of tax stamps sold in the first half of 2010 has increased by 5% compared to a year ago, indicating that the state’s cigarette consumption has risen. The increase is believed to be due to a combination of factors. Previously, New Hampshire’s cheaper tobacco taxes had tempted Maine smokers to cross the border for cheaper cigarettes, but a recent tax increase in New Hampshire reduced the motivation to do this by bringing the states’ taxes per pack to within 20 cents of each other. Adding to this, the prevalence of smoking among Maine high school students increased from 14% to 18% since last year, and crackdowns have been made on the sale of untaxed cigarettes, forcing smokers to purchase tax-stamped packs. Anti-smoking advocates hope that the increase in sales is short-term, and that the long history of declining cigarette sales will resume soon. Read more here.

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