Tobacco Tax Tapestry
Published in CSP Daily News
Increases took effect in four states July 1
WASHINGTON -- On July 1, cigarette tax increases took effect in four states: New Hampshire, Ohio, Virginia and Washington. This brings to 39including the District of Columbia and Puerto Ricothe number of states that have increased cigarette taxes since Jan. 1, 2002. During that time, the average state cigarette tax has more than doubled from 43.4 cents to 89.8 cents a pack, raising billions in new state revenue.
On July 1, cigarette taxes increased in New Hampshire by 28 cents to 80 cents a pack, in Ohio by 70 cents to $1.25 cents a pack, in Washington [image-nocss] by 60 cents to $2.025 a pack and in Virginia by 10 cents to 30 cents a pack (the Virginia increase is the second half of a two-phase increase approved a year ago).
According to this data compiled by the Campaign for Tobacco-Free Kids, two other states have also approved cigarette tax increases this year. On September 19, Maine's cigarette tax will double to $2 per pack. On June 1, Kentucky increased its cigarette tax by 27 cents to 30 cents a pack.
Several tobacco-growing states are among those that have increased cigarette taxes in recent years, including Kentucky, Virginia, Georgia and Tennessee; however, North Carolina and South Carolina still have the nation's two lowest cigarette tax rates at five cents and seven cents a pack, respectively. North Carolina lawmakers are currently negotiating a compromise between a 35-cent-a-pack increase approved by the state Senate and a 25-cent-a-pack increase approved by the House.
In addition to North Carolina and South Carolina, other states with the 10 lowest cigarette tax rates include Missouri (17 cents), Mississippi (18 cents), Tennessee (20 cents), Kentucky (30 cents), Virginia (30 cents), Florida (33.9 cents), Iowa (36 cents), and Louisiana (36 cents).
Ohio's 70-cent-a-pack spike in cigarette taxes Friday put the state among 10 that are turning to tobacco this year to pay for state services in tight budget times, the Associated Press said.
A new round of increases also went into effect in Virginia, Washington and New Hampshire, raising revenue mostly for health care and education. The American Cancer Society said Alaska, Colorado, Oklahoma, Montana and Kentucky have increased taxes this year, and an increase in Maine will start in September.
Ohio also joins 18 states that levy a tax of at least $1 a pack. Ohio's is $1.25. The new revenue has not been earmarked, but goes to the state's general fund. The state estimates the increase will generate an additional $505 million in the fiscal year that started Friday, but drop back to $425 million the following year.
The difference between the two years is that tax must be paid on all cigarettes now in stock.
The annual cost of Ohio-bought cigarettes for a one-pack-a-day smoker jumped by $255.50 on Friday. At two packs a day, a smoker would pay an extra $511.
That is why many consumers buy cigarettes elsewhere. "This is going to be big for Kentucky," Jeff Fischer, owner of One Stop Liquor & Tobacco in Bellevue, Ky., just across the Ohio River from Cincinnati, told AP.
A pack of Marlboros sold for $3.84 at his store on Friday. At a SuperAmerica station in Lawrenceburg, Ind., a popular southwest Ohio destination because of its gambling boat, Marlboros were $3.05. At a Stop-N-Go convenience store in Cincinnati, they were $4.84.
Fischer said Kentucky's 27-cent-a-pack increase has not affected sales, but he has had to beef up security. "People were grabbing cartons and running out the front door," he said. "That's what higher prices are doing."
Mike Gowrylow, spokesperson for Washington's department of revenue, said that state's 60-cent increase will help balance the budget and should raise about $88.5 million a year for education. At $2.02 1/2 a pack, Washington's tax is third highest in the nation. With its historically high tax, the state has lost tax revenue to cross-border shopping, Indian smoking shops and Internet sales, he said. "One out of three cigarettes smoked in Washington is contraband," Gowrylow said.
Kristy Smith, a spokesperson for the Virginia department of taxation, said that state's 10-cent increase is expected to raise $98.5 million a year to pay for health care for children from low-income families, the elderly and disabled. "There wasn't necessarily a [budget] hole, but this will allow us to make investments in public safety and health care," Smith told AP. Virginia had a 17.5-cent increase just a year ago, but even with the additional dime on Friday the excise tax is low at 30 cents a pack. Smith does not expect the increase to hurt sales.
Before its increase, Kentucky's tax was just 3 cents a pack. It is still a nickel in South Carolina, and 7 cents in North Carolina. Rhode Island is most expensive at $2.46 a pack, not counting the combined $3 a pack assessed by the state of New York and New York City.
Click here for state tobacco tax data from the Campaign for Tobacco-Free Kids.
Click here for additional state tobacco data compiled by R.J. Reynolds.