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Tobacco Excise Tax Increases: a 2009-2010 Snapshot

From 2009-2010 many states proposed tax increases on cigarettes, moist smokeless tobacco (MST), and cigars.. In addition, in April 2009 the federal government raised the federal excise tax (FET) on cigarettes by 61.66 cents per pack – to $1.01 per pack . At the same time, the FET on moist smokeless tobacco was increased from 4 cents per 1.2 oz can to 11 cents per 1.2 oz can and the FET on cigars increased from 20.72% of the wholesale price (capped at $48.75 per 1,000 or 5 cents per cigar) to 52.75% of the wholesale price (capped at 40 cents per cigar).

However, these federal taxes make up just a portion of the increasing tax burden on adult tobacco consumers. Below is a sample of state excise tax (SET) proposals from the last two years:

In Alabama, House legislators proposed a cigarette SET increase of 32.5 cents per pack in 2009 and 2010; however, these proposal failed.

In Arkansas, legislation was enacted in 2009 that raised the cigarette SET rate from 56 cents per pack to $1.15 per pack, and raised the MST SET 32% to 68% of the wholesale price.

In California, a number of bills were proposed in 2009 and 2010 that called for the cigarette SET to be increased, by as much as $2.10 per pack. These proposals would also cause MST and large cigar SET increases, at an undetermined amount. To date, these bills have failed.

In Connecticut during 2009, the legislature enacted a cigarette SET increase of $1.00 to $3.00 per pack. The bill also increased the MST SET 40 cents to 55 cents/oz. and increased the large cigar SET from 20% to 27.5% of the wholesale price.

In Delaware, the legislature increased the cigarettes SET by 45 cents to $1.60 per pack in 2009.

In Florida, legislation was enacted in 2009 that cigarette SET to $1.339, a $1.00 per pack increase, and increased the MST, Roll your own and pipe tobacco SET‘s from 25% to 85% of the wholesale price.

In Georgia, the legislature proposed a cigarette SET increase in both 2009 and 2010, including a $1.00 per pack increase to the cigarette SET and an MST SET increase from 10% to 25% of the wholesale price. These proposals were defeated.

In Hawaii, the legislature increased cigarette SET by 20 cents per pack in 2009 and then by another 20 cents per pack in 2010. During that time the cigarette SET rose from $2.40 to $3.00. In 2009, the cigar SET increased from 40% to 50% of the wholesale price and the MST SET increased to 70% of the wholesale price.

In Illinois, the legislature proposed a cigarette SET increase in 2009 and 2010. In each case the proposed increase was $1.00 per pack, which would have raised the cigarette SET to $1.98 per pack, and because of local taxes, this would have made the cigarette SET in Chicago $3.66 per pack. These proposals were defeated.

In Indiana in 2009, the legislature proposed a large cigar SET increase of 24% of the wholesale price to 31% of the wholesale price. The proposal failed.

In Kansas in 2009, the legislature proposed a bill that would have increased the cigarettes SET by 95 cents per pack and would have increased the large cigar SET to 57% of the wholesale price, up from 10% of the wholesale price. In 2010, the legislature proposed a cigarette SET increase of 55 cents per pack and a large cigar SET increase from 10% to 40% of the wholesale price. These proposals failed.

In Kentucky in 2009, the legislature enacted a doubling of all tobacco SET’s – a cigarette SET increase from 30 cents to 60 cents per pack, a large cigar SET increase from 8% to 15% of the wholesale price, and an MST SET increase from 9.5 cents per unit to 19 cents per unit.

The Louisiana state legislature proposed various SET increases in 2009 including a cigarette SET increase of $1.00 per pack and an MST SET increase from 10% to 30% of the wholesale price. These proposals failed.

In Maine, the legislature proposed tobacco SET increases that failed in 2009, carried over to 2010, and then failed again in 2010. The proposal was for a cigarette SET increase of $1.00 per pack.

In Massachusetts, the legislature proposed a large cigar SET in 2009 (increasing the rate from 30% to 80% of the wholesale price). In 2010, the legislature proposed a large cigar SET increase from 30% to 110% of the wholesale price, an MST SET increase from 90% to 110% of the wholesale price and a RYO and pipe tobacco SET increase from 30% to 120% of the wholesale price. These proposals failed.

In Minnesota, the legislature proposed several tobacco SET increase bills in 2009. The bills contained cigarette SET increases ranging from 54 cents to $1.00 per pack, along with large cigar SET increases. These proposals failed.

In Mississippi, the legislature enacted a 50 cents per pack cigarette SET increase in 2009. In 2010, the state proposed an additional increase of 50 cents per pack and also proposed to raise the large cigar SET from 15% to 22.5% of the wholesale price, however, these proposals failed.

In Missouri, the legislature proposed a 16 cent per pack cigarette SET increase in 2009 and again in 2010. These proposals failed.

In Montana, in 2009, the legislature proposed increasing the MST SET from 85 cents/oz to $2.01/oz, and the large cigar SET from 50% to 118% of the wholesale price. The proposal failed.

In Nevada in 2009, the legislature proposed a $1.00 per pack cigarette SET increase, which would have raised the SET to $1.80 per pack. The proposal failed.

In New Hampshire, the legislature raised the cigarette SET in 2009 by 45 cents to $1.78 per pack. The legislature also increased the large cigar SET from 19% to 49% of the wholesale price in 2009 and then to 65.03% of the wholesale price in 2010. The legislature also proposed a 35 cents per pack cigarette SET increase in 2010, however, this proposal failed.

In New Jersey, the legislature increased the cigarettes SET by 12.5 cents to $2.70 in 2009.

In New York, in 2009, the legislature raised the large cigar SET to 46% of the wholesale price. In 2010, the legislature increased the cigarettes SET by $1.60 to $4.35 per pack, increased the large cigar SET from 46% to 75% of the wholesale price and increased the MST SET from 96 cents to $2.00/oz.

In North Carolina in 2009, the legislature increased the cigarette SET by 10 cents to 45 cents per pack and the large cigar SET from 10% to 12.8% of the wholesale price.

In Ohio, in 2009, the legislature proposed an increase on the large cigar SET from 17% to 34% of the wholesale price. This proposal was carried over to 2010 and subsequently failed.

In Oregon, there were several SET increases proposed, including a proposal by the Governor to increase the cigarette SET by 60 cents to $1.78 per pack and to increase the large cigar SET from 65% to 90% of the wholesale price. These proposals failed.

In Pennsylvania, in 2009, the legislature increased the cigarette SET by 25 cents to $1.60 per pack. In 2009 and 2010, the legislature proposed several SET increases on large cigars and MST (currently there is no tax), as well as an additional cigarette SET increase in 2010 of 10 cents. These proposals failed.

In Rhode Island, in 2009, the legislature passed a $1.00 ncrease on the cigarette SET to $3.46 per pack and increased the large cigar SET from 40% to 80% of the wholesale price.

In South Carolina, the legislature enacted a 50 cents per pack cigarette SET increase in 2010.

In Utah, the legislature proposed three tobacco SET increase bills in 2007. Those proposals included increases in the cigarette SET ranging from 61.5 cents to $2.30 per pack, along with increases in the large cigar SET. These proposals failed. In 2010, the legislature passed a $1.005 increase to the cigarette SET, to $1.70 per pack. The legislature also increased the large cigar SET from 35% to 86% of the wholesale price and increased the MST SET by $1.08 to $1.83 per ounce.

In Vermont, the legislature passed tobacco SET increases in 2009 and 2010. In 2009, the state enacted a 25 cents per pack cigarette SET increase and increased the large cigar SET from 41% to 92% of the wholesale price. In 2010, the legislature increased the MST and roll-your-own tobacco SET from $1.66 to $1.87 per ounce.

In Virginia, in 2009, the Governor proposed a $0.30 per pack cigarette SET increase. The proposal failed.

In Washington, the legislature passed a $1.00 cigarette SET increase, to $3.025 per pack in 2010. In 2009, Washington proposed several cigarette SET increases ranging from 40 cents to $1.00, however these proposals failed.

In West Virginia, in 2009 and 2010, the state proposed cigarette SET increases, ranging from 70 cents to 80 cents per pack. The legislature also proposed an increase on the large cigar SET from 7% to 14% of the wholesale price both years. These proposals failed.

In Wisconsin, the legislature enacted a 75 cent increase on the cigarette SET to $2.52 per pack and increased the large cigar and MST SET’s from 50% to 71% of the wholesale price and $1.31 to 100% of the wholesale price, respectively, in 2009.

In Wyoming, the legislature proposed a 50 cent cigarette SET increase in 2009. The proposal failed.