Back in March, we noted that the District of Columbia faced lower cigarette tax revenues than expected after its recent its recent cigarette tax rate increase from $2 per pack to $2.50 per pack. That downward trend has continued: Cigarette tax collections continue their stunning collapse in FY 2010, down 23.6 percent between October and April compared to the same period a year earlier. The $15.9 million in tobacco tax collections through April are off $4.9 million despite a region highest $2.50 per pack tobacco tax. The tax rate, 50 cents higher than it was in 2009, took effect Oct. 1.[…] [W]hen the council agreed to hike the cigarette tax last summer, [it projected] a $9.7 million bump in tobacco revenues. [Instead], it created a $15 million-plus hole in the budget. D.C. Chief Financial Officer Natwar Gandhi admits that smokers probably went elsewhere for cigarette purchases. (Maryland’s tax is $2 per pack; Virginia’s is 30 cents per pack. More on cigarette taxes here.
