California Flavored Tobacco Ban May Cost More than $300 Million in First Year February 24, 2023 California is losing tax revenue while consumers turn to cross-border purchases or, often, illicit trade of flavored cigarettes, which makes everyone worse off.
Cigarette Taxes and Cigarette Smuggling by State, 2020 December 6, 2022 People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
Cigarette Taxes in Europe May 31, 2022 Ireland and France levy the highest excise duties on cigarettes in the EU, at €8.85 ($10.47) and €6.88 ($8.13) per 20-cigarette pack, respectively.
Comments on Tobacco Product Standard for Menthol in Cigarettes May 19, 2022 Tax Foundation comments on the state tax and revenue implications of the proposed tobacco product standard for menthol in cigarettes.
FDA Menthol Ban Would Boost Smuggling, Reduce Revenues, with Few Health Benefits April 28, 2022 Learn more about the FDA's proposal to ban the sale of menthol cigarettes and flavored cigars. Including its effect on revenue & public health measures.
Federal Menthol Cigarette Ban May Cost Governments $6.6 Billion March 2, 2022 The FDA's expected announcement of a national ban on menthol-flavored cigarettes and cigars with a characterizing flavor would carry significant revenue implications for both the federal government and state governments, with likely limited benefits in smoking cessation.
Massachusetts Flavored Tobacco Ban: No Impact on New England Sales February 3, 2022 A recent JAMA Internal Medicine study on the impact of the Massachusetts flavored tobacco ban indicates that it has been a success. Unfortunately, it left out a very important piece of information: cross-border trade.
Wrong Tax Base Leads to Multiple Issues for Federal Nicotine Tax Proposal November 4, 2021 The nicotine tax proposal in the Build Back Better Act neglects sound excise tax policy design and by doing so risks harming public health. Lawmakers should reconsider this approach to nicotine taxation.
Should Tax Policy Play a Role in Tobacco Harm Reduction? October 8, 2021 In an effort to raise roughly $100 billion, the House proposal would double cigarette taxes and increase all other tobacco and nicotine taxes to comparable rates—a strategy with severe unintended consequences.
Federal Tobacco Tax Proposal Could Result in 50% Increase in State Taxes September 20, 2021 The potential federal tax increase of over 1,600 percent on dipping tobacco as a result of the House Democrats' proposal could result in state taxes and retail prices increasing by more than 50 percent in certain states.
House Tobacco Proposals Defy Biden’s Tax Pledge and Undermine Harm Reduction Efforts September 13, 2021 House Democrats’ newly released $3.5 trillion tax legislation includes a tax increase on tobacco, nicotine, and vapor products levied on tobacco manufacturers. But ultimately it would fall heavily on tobacco consumers—many of the group that earns less than $400,000 that President Biden pledged would not see a tax increase.
Compare Tobacco Tax Data in Your State July 22, 2021 In the United States, tobacco is taxed at both the federal and state and sometimes even local levels. These layers of taxes often result in very high levels of taxation—the highest of any consumer item. The retail price of cigarettes, for instance, is more than 40 percent taxes on average. In some states, like Minnesota and New York, more than 50 percent of the price paid by consumers comes from taxes.
Banning Tobacco Flavors Could Prove Costly for D.C. June 15, 2021 Early signs indicate that flavors bans will not decrease tobacco consumption. It is not in the interest of the District of Columbia to pursue a public health measure that merely sends tax revenue to its neighboring jurisdictions without improving public health.
Four Issues with Proposal to Increase Tobacco and Vapor Taxes in Maine January 31, 2022 Maine's proposal to increase tobacco and vapor taxes has at least four major issues: flawed revenue allocation, risk of increased smuggling, regressivity, and violation of the harm reduction principle.
How High Are Vapor Taxes in Your State? April 7, 2021 Several states are considering introducing or increasing taxes on vapor products to make up declining tax revenue from traditional tobacco products or to fill budget holes in the wake of the coronavirus pandemic. However, lawmakers should approach the issue carefully because flawed excise tax design on vapor products could drive consumers back to more harmful combustible products like cigarettes.
Why Smoking and Vaping Tax Increases Should Not be Part of West Virginia’s Reform Proposals April 5, 2021 In West Virginia, both Senate Republicans and Gov. Justice have offered proposals for reductions to the state’s income tax. In both of the proposals, excise taxes on tobacco and nicotine products are part of the pay-fors that are supposed to make up revenue lost due to lower income tax rates.
Washington State Lawmakers Consider 1,000% Tax Increase on Tobacco Businesses March 19, 2021 Limiting addiction to nicotine is a laudable goal, but lawmakers should exercise caution with the methods employed. Using gross receipts taxes on businesses to effectively levy an excise tax introduces complexity to an already flawed tax design. It is better to let the excise tax internalize externalities and the business tax raise general revenue.
Excise Tax Application and Trends March 16, 2021 The excise tax family is growing. Over the last decade, several products have become subject to excise taxes or are in the process of becoming so. Given this development, it is more crucial than ever that lawmakers, businesses, and consumers understand the possibilities and, more importantly, limitations of excise tax application.
Smoking High Excise Taxes on Vapor Products Could Be Coming to West Virginia February 18, 2021 West Virginians would face extraordinarily high taxes on vapor products in state if Senate Bill 68 becomes law. The bill would increase taxes on liquid used in vapor products from 7.5 cents per milliliter (ml) to $1 per ml—an increase of over 1,300 percent.
Tax-A-Rama in Maryland February 9, 2021 The potential override of Gov. Larry Hogan’s (R) veto of a digital advertising tax (HB732) looms large over the current legislative session in Maryland, though it is only one of many tax proposals under consideration in the state.
Washington State Lawmakers Considering New Bans and Higher Taxes on Nicotine Products February 1, 2021 Washington state lawmakers have proposed a bill that would make it the second state to ban all flavored tobacco and the first to impose a nicotine cap on vapor products, and would increase taxes on vapor to among the highest in the nation.
Massachusetts Flavored Tobacco Ban Has Severe Impact on Tax Revenue January 19, 2021 The Massachusetts flavored tobacco ban highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.
Indiana Lawmakers Consider Cigarette Tax Increase December 1, 2020 While increasing taxes on cigarettes may limit demand, a 200 percent hike may also result in a number of unintended consequences, such as increased smuggling.
New York Lawmaker Looks to Sin Taxes Once More November 24, 2020 New York already suffers from significant smuggling of untaxed tobacco products—smuggled cigarettes accounted for 53 percent of cigarettes consumed in the state in 2018—and further increasing tobacco taxes is likely to make matters worse.
Cigarette Taxes and Cigarette Smuggling by State, 2018 November 24, 2020 Excessive tax rates on cigarettes in some states induce substantial black and gray market movement of tobacco products into high-tax states from low-tax states or foreign sources. New York has the highest inbound smuggling activity, with an estimated 53.2 percent of cigarettes consumed in the state deriving from smuggled sources.
Taxation of Tobacco and Vapor Products on the Ballot in Oregon October 7, 2020 Oregon's Measure 108 introduces a risk of increased tax avoidance and evasion activity as consumers of the products often procure cigarettes from lower tax jurisdictions. At $3.33 per pack, Oregon would have the highest excise tax on cigarettes in the region.
Massachusetts Ban of Flavored Cigarettes Is Getting Expensive August 3, 2020 Aside from public health concerns, a ban on flavored tobacco, especially when including cigarettes, has significant tax implications and could result in unintended consequences such as increased smuggling. In Massachusetts, more than 20 percent of cigarettes smoked are purchased out of state.
Cigarette Taxes in Europe July 16, 2020 Ireland and the United Kingdom levy the highest excise duties on cigarettes in the European Union (EU), at €8.00 ($8.95) and €6.83 ($7.64) per 20-cigarette pack, respectively. This compares to an EU average of €3.22 ($3.61). Bulgaria (€1.80 or $2.01) and Slovakia (€2.07 or $2.32) levy the lowest excise duties.
Michigan Vapor Tax Bill Gets It Half-Right June 18, 2020 In line with the nationwide trend of taxing vapor products, the Michigan Senate has passed a new 18 percent tax on vapor products. These taxes are often intended to achieve a two-fold goal: deterring youth use and raising revenue. The Michigan bill is no exception.
Colorado Tobacco Tax Bill Includes Positive Change June 11, 2020 While it is understandable that lawmakers and organizers are worried about Colorado’s financial situation, they should remember that narrow taxes are volatile and disrupt markets. Excise taxes can play a role in state revenues even as policymakers appreciate that excise taxes are not viable long-term revenue tools for general spending priorities.
How High Are Vapor Taxes in Your State? June 3, 2020 Many states may be looking toward vapor and other excise taxes to fill budget holes caused by the coronavirus crisis. While those areas may represent untapped revenue sources for many states, taxing those activities is unlikely to raise much revenue in the short term.
Can States Close Budget Deficits with Excise Tax Hikes? April 15, 2020 We examine whether excise taxes are a solution to budget deficits, and while the short answer to that question is no, there are of course nuances. Excise taxes can play a role in state revenues even as policymakers appreciate that excise taxes are not viable long-term revenue tools for general spending priorities.
What Happens with State Excise Tax Revenues During a Pandemic? March 25, 2020 States will have to consider the effects of the COVID-19 pandemic on their excise tax revenues, including from gas taxes, tobacco taxes, and alcohol taxes.
Excise Taxes on Vapor Products Are Trending March 11, 2020 While lawmakers are working through the design of vapor tax proposals, they must thread the needle between protecting adult smokers’ ability to switch and barring minors’ access to nicotine products. A good first step is creating appropriate definitions for the new nicotine products to avoid unintended disproportionate taxation based on design differences or bundling.
Maryland Legislature Seeks Revenue with Risky Proposals February 26, 2020 One notable consequence of high state tobacco excise tax rates is increased smuggling as people procure discounted products from low-tax states and sell them in high-tax states. Smugglers wouldn’t have to look far to find cheaper smokes. All of Maryland’s neighboring states have rates lower than $4 per pack, including Virginia ($1.20) and West Virginia ($0.30). Such an increase would impact the many small business owners operating vape shops around the state and convenience stores relying heavily on vapers as well as tobacco sales.
Banning Flavored Tobacco Could Have Unintended Consequences February 12, 2020 The prospect of a ban on flavored tobacco and nicotine products highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.
Taxing Nicotine Products: A Primer January 22, 2020 New nicotine products, along with a greater consciousness about the dangers of smoking, have prompted millions to give up smoking. This has contributed to federal and state excise tax collections on tobacco products declining since 2010. Our new report outlines the best way to tax nicotine products based on health outcomes and revenue stability.
Virginia Governor Looks to Excise Taxes December 23, 2019 The proposed budget reflects a growing trend as policymakers across the country look to excise taxes as long-term solutions to budget woes. While excise taxes can be a part of the revenue picture, they are not a sustainable revenue source due to their narrow base, which is easily affected by changes in consumer behavior or market conditions.
Cigarette Taxes in Europe August 22, 2019 Today, Ireland and the United Kingdom levy the highest excise duties on cigarettes in the European Union (EU), at €7.57 (US $8.93) and €6.57 ($7.75) per 20-cigarette pack, respectively. This compares to an EU average of €3.09 ($3.64). In contrast, Bulgaria (€1.76 or $2.07) and Hungary (€1.96 or $2.31) levy the lowest excise duties.
How High Are Cigarette Taxes in Your State? April 10, 2019 Cigarette taxes around the country are levied on top of the federal rate of $1.0066 per 20-pack of cigarettes. As of 2016, taxes accounted for almost half of the retail cost of a pack of cigarettes.
How Stable is Cigarette Tax Revenue? May 3, 2021 This web tool allows taxpayers to see how cigarette tax revenues have changed since 1955. Across almost all states, a clear pattern of volatility emerges. Tax rate hikes are met with a momentary bump in revenue, followed by a falloff.
California Flavored Tobacco Ban May Cost More than $300 Million in First Year February 24, 2023 California is losing tax revenue while consumers turn to cross-border purchases or, often, illicit trade of flavored cigarettes, which makes everyone worse off.
Cigarette Taxes and Cigarette Smuggling by State, 2020 December 6, 2022 People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
Federal Menthol Cigarette Ban May Cost Governments $6.6 Billion March 2, 2022 The FDA's expected announcement of a national ban on menthol-flavored cigarettes and cigars with a characterizing flavor would carry significant revenue implications for both the federal government and state governments, with likely limited benefits in smoking cessation.
Massachusetts Flavored Tobacco Ban: No Impact on New England Sales February 3, 2022 A recent JAMA Internal Medicine study on the impact of the Massachusetts flavored tobacco ban indicates that it has been a success. Unfortunately, it left out a very important piece of information: cross-border trade.
Federal Tobacco Tax Proposal Could Result in 50% Increase in State Taxes September 20, 2021 The potential federal tax increase of over 1,600 percent on dipping tobacco as a result of the House Democrats' proposal could result in state taxes and retail prices increasing by more than 50 percent in certain states.
Compare Tobacco Tax Data in Your State July 22, 2021 In the United States, tobacco is taxed at both the federal and state and sometimes even local levels. These layers of taxes often result in very high levels of taxation—the highest of any consumer item. The retail price of cigarettes, for instance, is more than 40 percent taxes on average. In some states, like Minnesota and New York, more than 50 percent of the price paid by consumers comes from taxes.
Banning Tobacco Flavors Could Prove Costly for D.C. June 15, 2021 Early signs indicate that flavors bans will not decrease tobacco consumption. It is not in the interest of the District of Columbia to pursue a public health measure that merely sends tax revenue to its neighboring jurisdictions without improving public health.
Four Issues with Proposal to Increase Tobacco and Vapor Taxes in Maine January 31, 2022 Maine's proposal to increase tobacco and vapor taxes has at least four major issues: flawed revenue allocation, risk of increased smuggling, regressivity, and violation of the harm reduction principle.
Why Smoking and Vaping Tax Increases Should Not be Part of West Virginia’s Reform Proposals April 5, 2021 In West Virginia, both Senate Republicans and Gov. Justice have offered proposals for reductions to the state’s income tax. In both of the proposals, excise taxes on tobacco and nicotine products are part of the pay-fors that are supposed to make up revenue lost due to lower income tax rates.
Washington State Lawmakers Consider 1,000% Tax Increase on Tobacco Businesses March 19, 2021 Limiting addiction to nicotine is a laudable goal, but lawmakers should exercise caution with the methods employed. Using gross receipts taxes on businesses to effectively levy an excise tax introduces complexity to an already flawed tax design. It is better to let the excise tax internalize externalities and the business tax raise general revenue.
Excise Tax Application and Trends March 16, 2021 The excise tax family is growing. Over the last decade, several products have become subject to excise taxes or are in the process of becoming so. Given this development, it is more crucial than ever that lawmakers, businesses, and consumers understand the possibilities and, more importantly, limitations of excise tax application.
Smoking High Excise Taxes on Vapor Products Could Be Coming to West Virginia February 18, 2021 West Virginians would face extraordinarily high taxes on vapor products in state if Senate Bill 68 becomes law. The bill would increase taxes on liquid used in vapor products from 7.5 cents per milliliter (ml) to $1 per ml—an increase of over 1,300 percent.
Tax-A-Rama in Maryland February 9, 2021 The potential override of Gov. Larry Hogan’s (R) veto of a digital advertising tax (HB732) looms large over the current legislative session in Maryland, though it is only one of many tax proposals under consideration in the state.
Washington State Lawmakers Considering New Bans and Higher Taxes on Nicotine Products February 1, 2021 Washington state lawmakers have proposed a bill that would make it the second state to ban all flavored tobacco and the first to impose a nicotine cap on vapor products, and would increase taxes on vapor to among the highest in the nation.
Massachusetts Flavored Tobacco Ban Has Severe Impact on Tax Revenue January 19, 2021 The Massachusetts flavored tobacco ban highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.
Indiana Lawmakers Consider Cigarette Tax Increase December 1, 2020 While increasing taxes on cigarettes may limit demand, a 200 percent hike may also result in a number of unintended consequences, such as increased smuggling.
New York Lawmaker Looks to Sin Taxes Once More November 24, 2020 New York already suffers from significant smuggling of untaxed tobacco products—smuggled cigarettes accounted for 53 percent of cigarettes consumed in the state in 2018—and further increasing tobacco taxes is likely to make matters worse.
Cigarette Taxes and Cigarette Smuggling by State, 2018 November 24, 2020 Excessive tax rates on cigarettes in some states induce substantial black and gray market movement of tobacco products into high-tax states from low-tax states or foreign sources. New York has the highest inbound smuggling activity, with an estimated 53.2 percent of cigarettes consumed in the state deriving from smuggled sources.
Taxation of Tobacco and Vapor Products on the Ballot in Oregon October 7, 2020 Oregon's Measure 108 introduces a risk of increased tax avoidance and evasion activity as consumers of the products often procure cigarettes from lower tax jurisdictions. At $3.33 per pack, Oregon would have the highest excise tax on cigarettes in the region.
Massachusetts Ban of Flavored Cigarettes Is Getting Expensive August 3, 2020 Aside from public health concerns, a ban on flavored tobacco, especially when including cigarettes, has significant tax implications and could result in unintended consequences such as increased smuggling. In Massachusetts, more than 20 percent of cigarettes smoked are purchased out of state.
Michigan Vapor Tax Bill Gets It Half-Right June 18, 2020 In line with the nationwide trend of taxing vapor products, the Michigan Senate has passed a new 18 percent tax on vapor products. These taxes are often intended to achieve a two-fold goal: deterring youth use and raising revenue. The Michigan bill is no exception.
Colorado Tobacco Tax Bill Includes Positive Change June 11, 2020 While it is understandable that lawmakers and organizers are worried about Colorado’s financial situation, they should remember that narrow taxes are volatile and disrupt markets. Excise taxes can play a role in state revenues even as policymakers appreciate that excise taxes are not viable long-term revenue tools for general spending priorities.
How High Are Vapor Taxes in Your State? June 3, 2020 Many states may be looking toward vapor and other excise taxes to fill budget holes caused by the coronavirus crisis. While those areas may represent untapped revenue sources for many states, taxing those activities is unlikely to raise much revenue in the short term.
What Happens with State Excise Tax Revenues During a Pandemic? March 25, 2020 States will have to consider the effects of the COVID-19 pandemic on their excise tax revenues, including from gas taxes, tobacco taxes, and alcohol taxes.
Excise Taxes on Vapor Products Are Trending March 11, 2020 While lawmakers are working through the design of vapor tax proposals, they must thread the needle between protecting adult smokers’ ability to switch and barring minors’ access to nicotine products. A good first step is creating appropriate definitions for the new nicotine products to avoid unintended disproportionate taxation based on design differences or bundling.
Maryland Legislature Seeks Revenue with Risky Proposals February 26, 2020 One notable consequence of high state tobacco excise tax rates is increased smuggling as people procure discounted products from low-tax states and sell them in high-tax states. Smugglers wouldn’t have to look far to find cheaper smokes. All of Maryland’s neighboring states have rates lower than $4 per pack, including Virginia ($1.20) and West Virginia ($0.30). Such an increase would impact the many small business owners operating vape shops around the state and convenience stores relying heavily on vapers as well as tobacco sales.
Banning Flavored Tobacco Could Have Unintended Consequences February 12, 2020 The prospect of a ban on flavored tobacco and nicotine products highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.
Taxing Nicotine Products: A Primer January 22, 2020 New nicotine products, along with a greater consciousness about the dangers of smoking, have prompted millions to give up smoking. This has contributed to federal and state excise tax collections on tobacco products declining since 2010. Our new report outlines the best way to tax nicotine products based on health outcomes and revenue stability.
Virginia Governor Looks to Excise Taxes December 23, 2019 The proposed budget reflects a growing trend as policymakers across the country look to excise taxes as long-term solutions to budget woes. While excise taxes can be a part of the revenue picture, they are not a sustainable revenue source due to their narrow base, which is easily affected by changes in consumer behavior or market conditions.
How High Are Cigarette Taxes in Your State? April 10, 2019 Cigarette taxes around the country are levied on top of the federal rate of $1.0066 per 20-pack of cigarettes. As of 2016, taxes accounted for almost half of the retail cost of a pack of cigarettes.
How Stable is Cigarette Tax Revenue? May 3, 2021 This web tool allows taxpayers to see how cigarette tax revenues have changed since 1955. Across almost all states, a clear pattern of volatility emerges. Tax rate hikes are met with a momentary bump in revenue, followed by a falloff.
Comments on Tobacco Product Standard for Menthol in Cigarettes May 19, 2022 Tax Foundation comments on the state tax and revenue implications of the proposed tobacco product standard for menthol in cigarettes.
FDA Menthol Ban Would Boost Smuggling, Reduce Revenues, with Few Health Benefits April 28, 2022 Learn more about the FDA's proposal to ban the sale of menthol cigarettes and flavored cigars. Including its effect on revenue & public health measures.
Federal Menthol Cigarette Ban May Cost Governments $6.6 Billion March 2, 2022 The FDA's expected announcement of a national ban on menthol-flavored cigarettes and cigars with a characterizing flavor would carry significant revenue implications for both the federal government and state governments, with likely limited benefits in smoking cessation.
Wrong Tax Base Leads to Multiple Issues for Federal Nicotine Tax Proposal November 4, 2021 The nicotine tax proposal in the Build Back Better Act neglects sound excise tax policy design and by doing so risks harming public health. Lawmakers should reconsider this approach to nicotine taxation.
Should Tax Policy Play a Role in Tobacco Harm Reduction? October 8, 2021 In an effort to raise roughly $100 billion, the House proposal would double cigarette taxes and increase all other tobacco and nicotine taxes to comparable rates—a strategy with severe unintended consequences.
Federal Tobacco Tax Proposal Could Result in 50% Increase in State Taxes September 20, 2021 The potential federal tax increase of over 1,600 percent on dipping tobacco as a result of the House Democrats' proposal could result in state taxes and retail prices increasing by more than 50 percent in certain states.
House Tobacco Proposals Defy Biden’s Tax Pledge and Undermine Harm Reduction Efforts September 13, 2021 House Democrats’ newly released $3.5 trillion tax legislation includes a tax increase on tobacco, nicotine, and vapor products levied on tobacco manufacturers. But ultimately it would fall heavily on tobacco consumers—many of the group that earns less than $400,000 that President Biden pledged would not see a tax increase.
Excise Tax Application and Trends March 16, 2021 The excise tax family is growing. Over the last decade, several products have become subject to excise taxes or are in the process of becoming so. Given this development, it is more crucial than ever that lawmakers, businesses, and consumers understand the possibilities and, more importantly, limitations of excise tax application.
Excise Taxes on Vapor Products Are Trending March 11, 2020 While lawmakers are working through the design of vapor tax proposals, they must thread the needle between protecting adult smokers’ ability to switch and barring minors’ access to nicotine products. A good first step is creating appropriate definitions for the new nicotine products to avoid unintended disproportionate taxation based on design differences or bundling.
Banning Flavored Tobacco Could Have Unintended Consequences February 12, 2020 The prospect of a ban on flavored tobacco and nicotine products highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.
Taxing Nicotine Products: A Primer January 22, 2020 New nicotine products, along with a greater consciousness about the dangers of smoking, have prompted millions to give up smoking. This has contributed to federal and state excise tax collections on tobacco products declining since 2010. Our new report outlines the best way to tax nicotine products based on health outcomes and revenue stability.
Cigarette Taxes and Cigarette Smuggling by State, 2020 December 6, 2022 People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
Cigarette Taxes in Europe May 31, 2022 Ireland and France levy the highest excise duties on cigarettes in the EU, at €8.85 ($10.47) and €6.88 ($8.13) per 20-cigarette pack, respectively.
Comments on Tobacco Product Standard for Menthol in Cigarettes May 19, 2022 Tax Foundation comments on the state tax and revenue implications of the proposed tobacco product standard for menthol in cigarettes.
FDA Menthol Ban Would Boost Smuggling, Reduce Revenues, with Few Health Benefits April 28, 2022 Learn more about the FDA's proposal to ban the sale of menthol cigarettes and flavored cigars. Including its effect on revenue & public health measures.
Federal Menthol Cigarette Ban May Cost Governments $6.6 Billion March 2, 2022 The FDA's expected announcement of a national ban on menthol-flavored cigarettes and cigars with a characterizing flavor would carry significant revenue implications for both the federal government and state governments, with likely limited benefits in smoking cessation.
Massachusetts Flavored Tobacco Ban: No Impact on New England Sales February 3, 2022 A recent JAMA Internal Medicine study on the impact of the Massachusetts flavored tobacco ban indicates that it has been a success. Unfortunately, it left out a very important piece of information: cross-border trade.
Wrong Tax Base Leads to Multiple Issues for Federal Nicotine Tax Proposal November 4, 2021 The nicotine tax proposal in the Build Back Better Act neglects sound excise tax policy design and by doing so risks harming public health. Lawmakers should reconsider this approach to nicotine taxation.
Should Tax Policy Play a Role in Tobacco Harm Reduction? October 8, 2021 In an effort to raise roughly $100 billion, the House proposal would double cigarette taxes and increase all other tobacco and nicotine taxes to comparable rates—a strategy with severe unintended consequences.
Federal Tobacco Tax Proposal Could Result in 50% Increase in State Taxes September 20, 2021 The potential federal tax increase of over 1,600 percent on dipping tobacco as a result of the House Democrats' proposal could result in state taxes and retail prices increasing by more than 50 percent in certain states.
House Tobacco Proposals Defy Biden’s Tax Pledge and Undermine Harm Reduction Efforts September 13, 2021 House Democrats’ newly released $3.5 trillion tax legislation includes a tax increase on tobacco, nicotine, and vapor products levied on tobacco manufacturers. But ultimately it would fall heavily on tobacco consumers—many of the group that earns less than $400,000 that President Biden pledged would not see a tax increase.
Compare Tobacco Tax Data in Your State July 22, 2021 In the United States, tobacco is taxed at both the federal and state and sometimes even local levels. These layers of taxes often result in very high levels of taxation—the highest of any consumer item. The retail price of cigarettes, for instance, is more than 40 percent taxes on average. In some states, like Minnesota and New York, more than 50 percent of the price paid by consumers comes from taxes.
Banning Tobacco Flavors Could Prove Costly for D.C. June 15, 2021 Early signs indicate that flavors bans will not decrease tobacco consumption. It is not in the interest of the District of Columbia to pursue a public health measure that merely sends tax revenue to its neighboring jurisdictions without improving public health.
Four Issues with Proposal to Increase Tobacco and Vapor Taxes in Maine January 31, 2022 Maine's proposal to increase tobacco and vapor taxes has at least four major issues: flawed revenue allocation, risk of increased smuggling, regressivity, and violation of the harm reduction principle.
Why Smoking and Vaping Tax Increases Should Not be Part of West Virginia’s Reform Proposals April 5, 2021 In West Virginia, both Senate Republicans and Gov. Justice have offered proposals for reductions to the state’s income tax. In both of the proposals, excise taxes on tobacco and nicotine products are part of the pay-fors that are supposed to make up revenue lost due to lower income tax rates.
Washington State Lawmakers Consider 1,000% Tax Increase on Tobacco Businesses March 19, 2021 Limiting addiction to nicotine is a laudable goal, but lawmakers should exercise caution with the methods employed. Using gross receipts taxes on businesses to effectively levy an excise tax introduces complexity to an already flawed tax design. It is better to let the excise tax internalize externalities and the business tax raise general revenue.
Excise Tax Application and Trends March 16, 2021 The excise tax family is growing. Over the last decade, several products have become subject to excise taxes or are in the process of becoming so. Given this development, it is more crucial than ever that lawmakers, businesses, and consumers understand the possibilities and, more importantly, limitations of excise tax application.
Smoking High Excise Taxes on Vapor Products Could Be Coming to West Virginia February 18, 2021 West Virginians would face extraordinarily high taxes on vapor products in state if Senate Bill 68 becomes law. The bill would increase taxes on liquid used in vapor products from 7.5 cents per milliliter (ml) to $1 per ml—an increase of over 1,300 percent.
Tax-A-Rama in Maryland February 9, 2021 The potential override of Gov. Larry Hogan’s (R) veto of a digital advertising tax (HB732) looms large over the current legislative session in Maryland, though it is only one of many tax proposals under consideration in the state.
Washington State Lawmakers Considering New Bans and Higher Taxes on Nicotine Products February 1, 2021 Washington state lawmakers have proposed a bill that would make it the second state to ban all flavored tobacco and the first to impose a nicotine cap on vapor products, and would increase taxes on vapor to among the highest in the nation.
Massachusetts Flavored Tobacco Ban Has Severe Impact on Tax Revenue January 19, 2021 The Massachusetts flavored tobacco ban highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.
Indiana Lawmakers Consider Cigarette Tax Increase December 1, 2020 While increasing taxes on cigarettes may limit demand, a 200 percent hike may also result in a number of unintended consequences, such as increased smuggling.
New York Lawmaker Looks to Sin Taxes Once More November 24, 2020 New York already suffers from significant smuggling of untaxed tobacco products—smuggled cigarettes accounted for 53 percent of cigarettes consumed in the state in 2018—and further increasing tobacco taxes is likely to make matters worse.
Cigarette Taxes and Cigarette Smuggling by State, 2018 November 24, 2020 Excessive tax rates on cigarettes in some states induce substantial black and gray market movement of tobacco products into high-tax states from low-tax states or foreign sources. New York has the highest inbound smuggling activity, with an estimated 53.2 percent of cigarettes consumed in the state deriving from smuggled sources.
Taxation of Tobacco and Vapor Products on the Ballot in Oregon October 7, 2020 Oregon's Measure 108 introduces a risk of increased tax avoidance and evasion activity as consumers of the products often procure cigarettes from lower tax jurisdictions. At $3.33 per pack, Oregon would have the highest excise tax on cigarettes in the region.
Massachusetts Ban of Flavored Cigarettes Is Getting Expensive August 3, 2020 Aside from public health concerns, a ban on flavored tobacco, especially when including cigarettes, has significant tax implications and could result in unintended consequences such as increased smuggling. In Massachusetts, more than 20 percent of cigarettes smoked are purchased out of state.
Cigarette Taxes in Europe July 16, 2020 Ireland and the United Kingdom levy the highest excise duties on cigarettes in the European Union (EU), at €8.00 ($8.95) and €6.83 ($7.64) per 20-cigarette pack, respectively. This compares to an EU average of €3.22 ($3.61). Bulgaria (€1.80 or $2.01) and Slovakia (€2.07 or $2.32) levy the lowest excise duties.
Colorado Tobacco Tax Bill Includes Positive Change June 11, 2020 While it is understandable that lawmakers and organizers are worried about Colorado’s financial situation, they should remember that narrow taxes are volatile and disrupt markets. Excise taxes can play a role in state revenues even as policymakers appreciate that excise taxes are not viable long-term revenue tools for general spending priorities.
Can States Close Budget Deficits with Excise Tax Hikes? April 15, 2020 We examine whether excise taxes are a solution to budget deficits, and while the short answer to that question is no, there are of course nuances. Excise taxes can play a role in state revenues even as policymakers appreciate that excise taxes are not viable long-term revenue tools for general spending priorities.
What Happens with State Excise Tax Revenues During a Pandemic? March 25, 2020 States will have to consider the effects of the COVID-19 pandemic on their excise tax revenues, including from gas taxes, tobacco taxes, and alcohol taxes.
Maryland Legislature Seeks Revenue with Risky Proposals February 26, 2020 One notable consequence of high state tobacco excise tax rates is increased smuggling as people procure discounted products from low-tax states and sell them in high-tax states. Smugglers wouldn’t have to look far to find cheaper smokes. All of Maryland’s neighboring states have rates lower than $4 per pack, including Virginia ($1.20) and West Virginia ($0.30). Such an increase would impact the many small business owners operating vape shops around the state and convenience stores relying heavily on vapers as well as tobacco sales.
Virginia Governor Looks to Excise Taxes December 23, 2019 The proposed budget reflects a growing trend as policymakers across the country look to excise taxes as long-term solutions to budget woes. While excise taxes can be a part of the revenue picture, they are not a sustainable revenue source due to their narrow base, which is easily affected by changes in consumer behavior or market conditions.
Cigarette Taxes in Europe August 22, 2019 Today, Ireland and the United Kingdom levy the highest excise duties on cigarettes in the European Union (EU), at €7.57 (US $8.93) and €6.57 ($7.75) per 20-cigarette pack, respectively. This compares to an EU average of €3.09 ($3.64). In contrast, Bulgaria (€1.76 or $2.07) and Hungary (€1.96 or $2.31) levy the lowest excise duties.
How High Are Cigarette Taxes in Your State? April 10, 2019 Cigarette taxes around the country are levied on top of the federal rate of $1.0066 per 20-pack of cigarettes. As of 2016, taxes accounted for almost half of the retail cost of a pack of cigarettes.
How Stable is Cigarette Tax Revenue? May 3, 2021 This web tool allows taxpayers to see how cigarette tax revenues have changed since 1955. Across almost all states, a clear pattern of volatility emerges. Tax rate hikes are met with a momentary bump in revenue, followed by a falloff.
Wrong Tax Base Leads to Multiple Issues for Federal Nicotine Tax Proposal November 4, 2021 The nicotine tax proposal in the Build Back Better Act neglects sound excise tax policy design and by doing so risks harming public health. Lawmakers should reconsider this approach to nicotine taxation.
Should Tax Policy Play a Role in Tobacco Harm Reduction? October 8, 2021 In an effort to raise roughly $100 billion, the House proposal would double cigarette taxes and increase all other tobacco and nicotine taxes to comparable rates—a strategy with severe unintended consequences.
Federal Tobacco Tax Proposal Could Result in 50% Increase in State Taxes September 20, 2021 The potential federal tax increase of over 1,600 percent on dipping tobacco as a result of the House Democrats' proposal could result in state taxes and retail prices increasing by more than 50 percent in certain states.
House Tobacco Proposals Defy Biden’s Tax Pledge and Undermine Harm Reduction Efforts September 13, 2021 House Democrats’ newly released $3.5 trillion tax legislation includes a tax increase on tobacco, nicotine, and vapor products levied on tobacco manufacturers. But ultimately it would fall heavily on tobacco consumers—many of the group that earns less than $400,000 that President Biden pledged would not see a tax increase.
Four Issues with Proposal to Increase Tobacco and Vapor Taxes in Maine January 31, 2022 Maine's proposal to increase tobacco and vapor taxes has at least four major issues: flawed revenue allocation, risk of increased smuggling, regressivity, and violation of the harm reduction principle.
How High Are Vapor Taxes in Your State? April 7, 2021 Several states are considering introducing or increasing taxes on vapor products to make up declining tax revenue from traditional tobacco products or to fill budget holes in the wake of the coronavirus pandemic. However, lawmakers should approach the issue carefully because flawed excise tax design on vapor products could drive consumers back to more harmful combustible products like cigarettes.
Why Smoking and Vaping Tax Increases Should Not be Part of West Virginia’s Reform Proposals April 5, 2021 In West Virginia, both Senate Republicans and Gov. Justice have offered proposals for reductions to the state’s income tax. In both of the proposals, excise taxes on tobacco and nicotine products are part of the pay-fors that are supposed to make up revenue lost due to lower income tax rates.
Washington State Lawmakers Consider 1,000% Tax Increase on Tobacco Businesses March 19, 2021 Limiting addiction to nicotine is a laudable goal, but lawmakers should exercise caution with the methods employed. Using gross receipts taxes on businesses to effectively levy an excise tax introduces complexity to an already flawed tax design. It is better to let the excise tax internalize externalities and the business tax raise general revenue.
Excise Tax Application and Trends March 16, 2021 The excise tax family is growing. Over the last decade, several products have become subject to excise taxes or are in the process of becoming so. Given this development, it is more crucial than ever that lawmakers, businesses, and consumers understand the possibilities and, more importantly, limitations of excise tax application.
Smoking High Excise Taxes on Vapor Products Could Be Coming to West Virginia February 18, 2021 West Virginians would face extraordinarily high taxes on vapor products in state if Senate Bill 68 becomes law. The bill would increase taxes on liquid used in vapor products from 7.5 cents per milliliter (ml) to $1 per ml—an increase of over 1,300 percent.
Tax-A-Rama in Maryland February 9, 2021 The potential override of Gov. Larry Hogan’s (R) veto of a digital advertising tax (HB732) looms large over the current legislative session in Maryland, though it is only one of many tax proposals under consideration in the state.
Washington State Lawmakers Considering New Bans and Higher Taxes on Nicotine Products February 1, 2021 Washington state lawmakers have proposed a bill that would make it the second state to ban all flavored tobacco and the first to impose a nicotine cap on vapor products, and would increase taxes on vapor to among the highest in the nation.
Massachusetts Flavored Tobacco Ban Has Severe Impact on Tax Revenue January 19, 2021 The Massachusetts flavored tobacco ban highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.
New York Lawmaker Looks to Sin Taxes Once More November 24, 2020 New York already suffers from significant smuggling of untaxed tobacco products—smuggled cigarettes accounted for 53 percent of cigarettes consumed in the state in 2018—and further increasing tobacco taxes is likely to make matters worse.
Taxation of Tobacco and Vapor Products on the Ballot in Oregon October 7, 2020 Oregon's Measure 108 introduces a risk of increased tax avoidance and evasion activity as consumers of the products often procure cigarettes from lower tax jurisdictions. At $3.33 per pack, Oregon would have the highest excise tax on cigarettes in the region.
Massachusetts Ban of Flavored Cigarettes Is Getting Expensive August 3, 2020 Aside from public health concerns, a ban on flavored tobacco, especially when including cigarettes, has significant tax implications and could result in unintended consequences such as increased smuggling. In Massachusetts, more than 20 percent of cigarettes smoked are purchased out of state.
Michigan Vapor Tax Bill Gets It Half-Right June 18, 2020 In line with the nationwide trend of taxing vapor products, the Michigan Senate has passed a new 18 percent tax on vapor products. These taxes are often intended to achieve a two-fold goal: deterring youth use and raising revenue. The Michigan bill is no exception.
Colorado Tobacco Tax Bill Includes Positive Change June 11, 2020 While it is understandable that lawmakers and organizers are worried about Colorado’s financial situation, they should remember that narrow taxes are volatile and disrupt markets. Excise taxes can play a role in state revenues even as policymakers appreciate that excise taxes are not viable long-term revenue tools for general spending priorities.
How High Are Vapor Taxes in Your State? June 3, 2020 Many states may be looking toward vapor and other excise taxes to fill budget holes caused by the coronavirus crisis. While those areas may represent untapped revenue sources for many states, taxing those activities is unlikely to raise much revenue in the short term.
Can States Close Budget Deficits with Excise Tax Hikes? April 15, 2020 We examine whether excise taxes are a solution to budget deficits, and while the short answer to that question is no, there are of course nuances. Excise taxes can play a role in state revenues even as policymakers appreciate that excise taxes are not viable long-term revenue tools for general spending priorities.
What Happens with State Excise Tax Revenues During a Pandemic? March 25, 2020 States will have to consider the effects of the COVID-19 pandemic on their excise tax revenues, including from gas taxes, tobacco taxes, and alcohol taxes.
Excise Taxes on Vapor Products Are Trending March 11, 2020 While lawmakers are working through the design of vapor tax proposals, they must thread the needle between protecting adult smokers’ ability to switch and barring minors’ access to nicotine products. A good first step is creating appropriate definitions for the new nicotine products to avoid unintended disproportionate taxation based on design differences or bundling.
Maryland Legislature Seeks Revenue with Risky Proposals February 26, 2020 One notable consequence of high state tobacco excise tax rates is increased smuggling as people procure discounted products from low-tax states and sell them in high-tax states. Smugglers wouldn’t have to look far to find cheaper smokes. All of Maryland’s neighboring states have rates lower than $4 per pack, including Virginia ($1.20) and West Virginia ($0.30). Such an increase would impact the many small business owners operating vape shops around the state and convenience stores relying heavily on vapers as well as tobacco sales.
Banning Flavored Tobacco Could Have Unintended Consequences February 12, 2020 The prospect of a ban on flavored tobacco and nicotine products highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.
Virginia Governor Looks to Excise Taxes December 23, 2019 The proposed budget reflects a growing trend as policymakers across the country look to excise taxes as long-term solutions to budget woes. While excise taxes can be a part of the revenue picture, they are not a sustainable revenue source due to their narrow base, which is easily affected by changes in consumer behavior or market conditions.
