Tobacco Pricing

Reports

More smokers avoiding taxes with self-rolled cigarettes and small cigars (KY)
According to state officials, Kentucky residents are buying little cigars and roll-your-own cigarettes to avoid paying the state’s 60 cent per pack tax on cigarettes. The small cigars are approximately $1.25 per pack compared to $3.25 per pack of cigarettes. Last fiscal year, the state collected $262.4 million from cigarette taxes, but state budget officials are estimating a 17.2% decline in cigarette tax revenue for this fiscal year. Public health advocates are calling for equal taxes to remove the price incentive for switching from cigarettes to other tobacco products. Read more here.

Tobacco price increase offsets N.H. tax cut (NH)
Immediately after New Hampshire's 10-cent cigarette tax cut went into effect this summer, tobacco companies increased their wholesale prices so that there was no net effect on retail prices. Legislators had touted the tax cut as a way to boost the state's economy by attracting bargain cigarette shoppers from surrounding states; however, with the increase in the wholesale price, the 10-cent rollback is not being passed on to consumers, and the tobacco companies stand to benefit from increased profits. Read more here. State revenues decreased 7% in July 2011, compared to July 2010, and more than half of the decline was attributed to a loss of cigarette tax revenues – an early sign that the cigarette tax cut will not have its intended effect of increasing state tax revenues. Click here to read about the early effects of the tax cut.

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