Tobacco Pricing

Research

Cigarette affordability in the United States
A new study assessed the affordability of cigarettes at the state and county levels. The researchers assessed cigarette affordability, defined as cigarette price in relation to individuals’ income level, between 1970 and 2010. The data show that in 2010, the cost of purchasing 100 packs of cigarettes was 1.62% of a smoker’s annual personal disposable income, on average. It was also reported that cigarettes were more affordable in the Southern and Western regions of the country, and were least affordable in Northeastern states. Although the price of cigarettes increased between 1970 and 2008, the affordability remained the same, and may have even become greater. The results from this study show that states need to take affordability into consideration when deciding excise tax increases since studies show that raising prices is an effective method of discouraging tobacco use. Click here to read the full report published in Nicotine & Tobacco Research.

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Reports

Tobacco firms save $1 billion with kitty litter in cigars
Tobacco companies have found a loophole that aids them in avoiding up to $1.1 billion in taxes. Big cigars are charged at a lower federal excise tax rate than small cigars, and tobacco companies have been using fillers to increase the weight of their cigars to avoid paying the higher tax rate. The fillers being used are reportedly the same material used in cat litter. Prior to the law that changed the tax rates among cigars by weight, 22 companies made small cigars. In the year after the law was implemented, twelve of those companies either switched to producing large cigars or increased their production of large cigars. According to the Government Accountability Office, this switch has resulted in millions of dollars of lost revenue for the government, and a doubling in sales of weightier tobacco products. Legislation has been introduced to close this loophole by equalizing the tax structure of tobacco products. Click here to read more. Click here to read a statement by the Campaign for Tobacco-Free Kids (CTFK) on this issue.

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State Policy

Area lawmakers wary of plan to hike tobacco tax (MA)
The Massachusetts House is considering a cigarette tax increase; however, some state legislators are concerned about the economy and regional competitiveness as reasons not to support the increase. Governor Deval Patrick has proposed a tax increase from $2.51 per pack to $3.51 per pack. Additionally, the proposal would levy taxes on other tobacco products that are currently not taxed such as smokeless tobacco. Opponents of the tax increase claim that residents are still recovering from the recession and cannot afford a tax increase. Increasing tobacco prices has been proven to be effective in reducing tobacco use prevalence, as well as improving the health of the public. Click here for more details. Click here to track H 2593 that has been referred to the Joint Committee on Revenue.

NH House votes to raise tobacco tax 20 cents (NH)
The New Hampshire House approved a bill that would increase the state tobacco tax by 20 cents. With this proposed increase, cigarettes would cost $1.88 per pack, and the proposal also includes a tax hike on other tobacco products. Even with the increased tax, New Hampshire would still have a lower tax than neighboring states, and the tax would bring in more revenue for the state. Read more here. Click here to track HB 659, which has been sent to the Senate for review.

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