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Tuesday, March 24, 2009

More on Tobacco Taxes in the States

The latest update on states looking to jack up tobacco taxes in the current economy from the March 21 New York Times is, to say the least, worrisome from a small retailer perspective.

The Times reported, for example, the following:

• “Budget shortfalls are pushing more than 20 states to look to tobacco for revenue, even those that have long been loath to touch cigarette taxes. In the South, where such taxes have been lower than in the rest of the country, Arkansas has nearly doubled its tax, to $1.15 a pack, and Kentucky’s will double, to 60 cents, on April 1. Increases are also under consideration in other tobacco-growing states like North Carolina, South Carolina and Georgia.”

• “In Oregon, now at $1.18 a pack, Gov. Theodore R. Kulongoski has proposed a 60-cent increase. In New Jersey, Gov. Jon Corzine is asking the Legislature for a 12.5-cent increase over the current $2.58. New York has the highest state tax on cigarettes, $2.75 a pack.”

Of course, the federal cigarette tax will rise by 62 cents in April.

One of the things being missed in this flurry to raise tobacco taxes is that small retailers suffer lost business, and the economy gets hit whenever resources are shifted from the private sector to the government.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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