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.