Hawaii May Not Get Expected Revenue From Cigarette Tax Increase As Smoking Drops

December 29, 2009

The Honolulu Advertiser reports that cigarette purchases in the state are down since the federal and state cigarette taxes went up, depriving the state of tax revenue they were counting on:

Through the first 10 months of the year, Hawai’i consumers bought 417 million packs of cigarettes, which, based on state tax collections, was down 12 percent from the same period a year ago.

While lower consumption of tobacco has health benefits, it could be problematic for a state that’s counting on recent tobacco-related tax hikes to generate nearly $47 million in added revenue over two years to help balance the state’s budget.[…]

Hawai’i’s tax hike has helped push the retail price of major brand-name cigarettes to $8 to $9 for a pack of 20 cigarettes. That hasn’t caused smokers such as Kaka’ako resident Michael Zehner to quit. However, it is causing others to find cheaper sources of cigarettes, he said.

“I pretty much smoke the same,” Zehner said. “I try to follow the law as it’s written (but) I have heard of other people that have turned to black-market sources, that have switched to cheaper brands (and) also getting them from friends in the military” or through the mail, he said.

More on Hawaii here.

More on cigarette taxes here.

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