North Carolina to Raise Cigarette Tax

August 8, 2005

The North Carolina legislature, after a month-long delay and three stopgap spending bills, has finally reached an agreement on a 2005-2007 budget. But not everyone is breathing a sigh of relief. Among the disappointed are many North Carolina smokers, who face a steep tax increase.

The legislature has decided to increase the cigarette tax—which is currently the lowest in the nation at 5 cents per pack—to 30 cents per pack on Sept. 1, then to 35 cents per pack on July 1, 2006.

Check out the Winston-Salem Journal’s cigarette tax calculator to see how much this tax increase will cost smokers over the course of a year.

Legislators hope the increase will help compensate for a projected $1.3 billion budget shortfall. Many other states are, unfortunately, trying to balance their budget the same way, not realizing—or caring—that excise taxes are regressive, distortionary, and often counterproductive.

For more information on cigarette taxes, see our data on state cigarette tax rates and collections, and our work on the detrimental effects of excise taxes here and here.

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