South Carolina Governor Vetoes Cigarette Tax Increase

South Carolina will continue to have the lowest state cigarette tax in the U.S. (7 cents per pack) following Governor Mark Sanford’s veto of a bill (H. 3567) that would raise it by 50 cents per pack. The House sustained the veto on May 27. The tax increase would have made South Carolina’s cigarette tax higher than neighbors Georgia and North Carolina. We’ve written extensively on how the wide variety of state cigarette excise taxes provides opportunities for consumers to shop for bargains across borders—and for smugglers to make substantial profits.

Sanford had been willing to sign a cigarette tax increase, but only as part of a fundamental tax reform that would create an optional flat income tax of 3.4 percent with no deductions, along with the existing 7 percent rate with deductions (one of the highest in the region). Because the legislature did not include the reform with the cigarette tax increase, Sanford refused to support it.

The tax increase had been expected to cost taxpayers $158 million, with the funds used to expand the state’s Medicaid program.

More on cigarette taxes here.

Find out what your state’s cigarette tax is here.

UPDATE: New York’s $1.25 per pack increase in the cigarette tax takes effect today, an 83 percent hike over the previous tax. Not everyone is as thrilled as state officials are:

Audrey Silk, who heads NYC Citizens Lobbying Against Smoker Harassment, said it’s ridiculous to expect smokers to quit just because the price is climbing. She switched to rolling her own cigarettes since the last New York City tax increase and suggests other smokers will find similar ways to satisfy nicotine cravings.

“No product has a tax at this rate on it,” Silk said. “If there was, there would be screaming, but since we’ve been beaten into submission and nobody listens to us, what else is there to do? It’s unjustifiable and you turn to alternatives, and any consumer group would do the same.”


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