Excise Taxes

State

Cigarette tax increase boosts state's revenue (CT)
Connecticut’s Office of Policy and Management (OPM) has announced that the state’s $1 per pack cigarette tax hike that went into effect last October has generated more money than predicted, and may have contributed to a decrease in the amount of packs sold. While the OPM had predicted that the tax increase would create an additional $99.3 million in revenue, the actual amount exceeded that estimate by about $5 million. Despite the additional revenue, the tax has decreased cigarette consumption; 108 million cigarette packs were sold in the past year, less than the OPM projection of 115 million packs of cigarettes that would have been sold if there was no tax increase. Proponents of Connecticut’s increased cigarette tax say that the tax has resulted in increased revenue, while reducing the prevalence of smoking statewide; opponents say that the decrease in cigarette sales is a sign that the state is losing revenue due to smokers purchasing cigarettes in other states or using roll-your-own tobacco. Connecticut has the fourth highest cigarette tax in the country, at $3 per pack, expected to bring in $117.6 million in the current fiscal year. Click here to read more.

Lung Association: Double Ohio cigarette tax, raise $400M (OH)
The American Lung Association of Ohio has released a study indicating that the state could collect $400 million per by doubling the state cigarette tax from $1.25 to $2.50. Ohio’s two million smokers consume about 742 million packs of cigarettes per year, making tobacco taxes a stable and reliable source of revenue. The Lung Association recommends that if the tax were to be raised, some of the revenue should be used to pay for the cost of smoking cessation treatment, which the state stopped funding earlier this year. A spokesperson for Governor Ted Strickland says he will not support a tax increase. Click here for more details.

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National

Close, and it is a cigar: Tobacco manufacturers are accused of exploiting a tax loophole to boost sales
At the urging of anti-tobacco advocates, the House Energy and Commerce Committee is investigating whether cigar manufacturers are using a loophole to minimize the excise tax rate on their products. In response to a 2009 increase in the federal tax on small cigars, some manufacturers have begun increasing the weight of these products so they qualify as large cigars, which are taxed at a much lower rate. This tactic is likely responsible for sales of large cigars quadrupling since the tax increase, while sales of small cigars dropped by 79%. The House committee is examining whether the manufacturers are evading taxes and if they are violating a Food and Drug Administration law that prohibits the sale of flavored cigarettes. Meanwhile, antismoking groups like the Campaign for Tobacco-Free Kids are asking Congress to rewrite the tobacco tax definitions to better differentiate cigarettes, little cigars, and large cigars. Click here to read more.

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