Tobacco News

Home » Tobacco prices » Cigarette taxes are gold rush for states

Cigarette taxes are gold rush for states

Cash-strapped states are hitting smokers hard in the pocketbook, raising cigarette taxes to help plug budget shortfalls.

So far this year, legislators have voted to raise cigarette taxes by $1 per pack in Utah and 75 cents a pack in New Mexico. At least a half dozen other states have been considering increases, including tobacco-growing South Carolina and Georgia. In 2009, 14 states and the District of Columbia raised cigarette taxes.

So much action is unusual: This is only the 10th time since 1950 that so many states have raised cigarette taxes at once, according to the Centers for Disease Control and Prevention.

“The main motivation at the moment for most legislators is revenue,” says Pete Fisher of the Campaign for Tobacco-Free Kids, an anti-smoking group. “The budget situation has certainly increased the number of states considering them.”

The average state cigarette tax is $1.34 per pack. That’s on top of the federal tax, raised last year to $1.01 per pack. Rhode Island has the highest state tax at $3.46 per pack; South Carolina’s is lowest at 7 cents. About 46 million Americans smoke.

Increased taxes will push smokers to buy in states where cigarettes are cheaper or turn to smuggled products, says Frank Lester, spokesman for cigarette-maker Reynolds American. Most smokers have low to moderate incomes and one-quarter of them fall below the poverty line, he says. “People are struggling.”

Budget woes trumped cigarette-maker influence this month in New Mexico, says state Rep. Gail Chasey, a Democrat, whose previous tax increase proposals fizzled. Democratic Gov. Bill Richardson on Wednesday signed the new 75-cent tax.

Among other states considering tax increases:

• Washington: State lawmakers in special session are poised to raise the state’s tax by $1, bringing it to more than $3 a pack.

• South Carolina: House lawmakers this month voted to raise the tax by 30 cents per pack; the Senate is considering an increase.

• Georgia: A bill to raise by $1 the state’s current 37-cent tax has the 91 votes it needs to pass if it gets to the House floor, says Rep. Ron Stephens, the Savannah Republican sponsoring the bill. But it’s stuck in committee and will die if it doesn’t get out today. “Bringing up any new tax in an election year is death — especially for a Republican,” he says. If it doesn’t pass this year, Stephens says he’s sure it will next year.

• Kansas: Gov. Mark Parkinson, a Democrat, has proposed raising the state’s 79-cent-per-pack cigarette tax by 55 cents. A Senate taxation committee last week voted down a 30-cent increase, but the state’s budget deficit makes some increase likely before the session is over, says Sen. Les Donovan, the committee’s Republican chair.

For every 10% price increase, cigarette consumption drops by 3% to 4% among adults and double that among youth, says Terry Pechacek, associate director for science at CDC’s Office on Smoking and Health. “It is one of the most reliable and effective strategies,” he says.

By Alison Young, USA TODAY

Comments are closed