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State Cigarette Excise Taxes — United States, 2010–2011

Increasing the price of cigarettes reduces the demand for cigarettes, thereby reducing youth smoking initiation and cigarette consumption and decreasing the prevalence of cigarette use in the United States overall, particularly among youths and young adults (1,2). The most common way governments have increased the price of cigarettes is by increasing cigarette excise taxes (1,2), which currently are imposed by all states and the District of Columbia (1). To update data on state cigarette excise taxes in 2009 (3), CDC conducted a survey of changes in state cigarette excise taxes during 2010–2011. During that period, eight states increased their cigarette excise taxes, and one state decreased its tax; as a result, the mean state tax increased from $1.34 in 2009 to $1.46 in 2011. Previous evidence indicates that further increases in cigarette excise taxes would be expected to result in further reductions in demand for cigarettes, decreasing smoking and associated morbidity and mortality (1,2).

Cigarettes and other tobacco products are taxed by federal, state, and local governments in various ways, including through excise taxes, which typically are levied per pack of 20 cigarettes (1). Cigarette excise tax rates are set by legislation; excise taxes usually are collected before the point of sale from manufacturers, distributors, or wholesalers and often are denoted by a tax stamp.

State cigarette excise tax data for this report were obtained from CDC's State Tobacco Activities Tracking and Evaluation (STATE) system database, which contains tobacco-related epidemiologic and economic data and information on state tobacco-related legislation (including the District of Columbia).* Data are collected quarterly from an online legal research database of state laws, analyzed, coded, and entered into the STATE system. The STATE system contains information on state laws regarding excise taxes for cigarettes in effect since the fourth quarter of 1995.

During 2010, cigarette excise tax increases took effect in six states (Hawaii, New Mexico, New York, South Carolina, Utah, and Washington). These increases ranged from $0.40 per pack in Hawaii to $1.60 per pack in New York; no state decreased its tax. For 2010, among the six states that increased their cigarette excise taxes, the mean state increase was $0.88 per pack. With its increase, New York became the only state with a cigarette excise tax exceeding $4.00 per pack. South Carolina, after increasing its cigarette excise tax for the first time since 1977 (from $0.07 to $0.57 per pack), no longer had the lowest state cigarette excise tax in the United States.

During 2011, cigarette excise tax increases took effect in three states (Connecticut, Hawaii, and Vermont). These increases ranged from $0.20 per pack in Hawaii to $0.40 per pack in Connecticut. Hawaii was the only state to increase its tax in both 2010 and 2011. For 2011, among the three states that increased their cigarette excise taxes, the mean state increase was $0.33 per pack. One state (New Hampshire) decreased its cigarette tax by $0.10 per pack, the first time a state decreased its cigarette excise tax since 2004.

From 2009 to 2011, the national mean cigarette excise tax among all states increased from $1.34 per pack in 2009 to $1.44 in 2010 and $1.46 in 2011. In 2011, Missouri had the lowest state cigarette excise tax in the United States, at $0.17 per pack, and New York had the highest, at $4.35 per pack (Table). Among six major tobacco-growing states (Georgia, Kentucky, North Carolina, South Carolina, Tennessee, and Virginia), the mean state cigarette excise tax was $0.49 cents per pack in 2011, an increase from $0.40 per pack in 2009. For all other states, including the District of Columbia, the mean cigarette excise tax was $1.59 per pack in 2011, an increase from $1.46 in 2009.

In 2011, California, Missouri, and North Dakota remained the only states that had not increased their state cigarette excise taxes since 2000. Missouri and North Dakota have not raised their state cigarette excise taxes ($0.17 and $0.44 per pack, respectively) since 1993, and California has not raised its cigarette excise tax ($0.87 per pack) since 1998.

Reported by

Michael A. Tynan, Gabbi R. Promoff, MA, Allison MacNeil, MPH, Office on Smoking and Health, National Center for Chronic Disease Prevention and Health Promotion, CDC. Corresponding contributor: Michael A. Tynan, mtynan@cdc.gov, 770-488-5286.

Editorial Note

Because increasing the price of cigarettes is effective in reducing cigarette use and preventing initiation, the Surgeon General has concluded that increased cigarette taxes would lead to substantial long-term improvements in health (1). The effectiveness of cigarette excise tax increases in reducing smoking-related death and disease can be increased when combined with other evidence-based interventions of a comprehensive tobacco control program, including smoke-free policies and media campaigns (2).

State cigarette excise taxes in major tobacco-growing states and bordering southeastern states remain substantially lower than state cigarette excise taxes in the rest of the United States. The major tobacco-growing states typically have higher smoking rates and do not have strong tobacco control policies and interventions in place. For example, in addition to having lower excise taxes, no southern state has a comprehensive state smoke-free law that prohibits smoking in workplaces, restaurants, and bars (5).

In addition to reducing smoking rates, cigarette excise tax increases have been shown to increase state revenue despite consumption declines, increases in the number of smokers quitting, and any increase in smuggling or tax avoidance (2,6). During 1990–2000, all states that increased their cigarette excise tax by at least $0.10 per pack also increased cigarette tax revenue (6).

In 2011, state lawmakers in New Hampshire enacted a law decreasing the state's cigarette excise tax by $0.10 per pack in an attempt to increase revenue by attracting cigarette customers from nearby states where cigarette excise taxes were higher (7,8). However, in the months following the tax decrease, revenues from the excise tax declined in the state (8,9). When compared with the previous fiscal year, New Hampshire's cigarette excise tax revenue declined by $12.5 million from July 2011 through February 2012, and approximately $8.3 million of this loss was attributable to the excise tax decrease.§

Excise tax increases can provide a revenue source to fund and expand comprehensive state tobacco control programs. The Institute of Medicine recommends that all states dedicate revenue by statute to fund tobacco prevention programs at the state-specific levels recommended by CDC (2,4). However, only one state (South Carolina) that increased its tax in 2010 or 2011 dedicated any revenue from its increase for tobacco prevention, even though such a move has been shown to produce a strong return on investment. For example, when California increased its cigarette excise tax in 1988, approximately $0.05 per pack was dedicated to state tobacco control and prevention programs (2,10). During the first 15 years of the California tobacco control program, the state invested $1.8 billion in cigarette excise tax revenue in the program, resulting in $86 billion in health-care cost savings (10).

The findings in this report are subject to at least two limitations. First the STATE system tracks only state-level data and data from the District of Columbia and does not include information on local (i.e., county, city, or other jurisdiction) taxes. Although not included in this analysis, approximately 460 communities impose a local tax on cigarettes, including New York City ($1.50 per pack) and Chicago-Cook County ($2.68 per pack). Also, the federal government imposes an excise tax on cigarettes of $1.01 per pack. Second, this report does not include information on price per pack of cigarettes, which can vary considerably, even among states with similar excise taxes, in part because of differences in manufacturer, wholesaler, and retailer pricing and discounting practices.

A Healthy People 2020 objective (TU-17.1) calls for all states and the federal government to increase their cigarette excise taxes by at least $1.50 per pack. New York was the first state to achieve this objective, increasing its tax by $1.60 in 2010. If all states were to achieve the objective and dedicate a portion of cigarette excise tax revenue to fund comprehensive tobacco control programs at the state-specific levels recommended by CDC, previous evidence indicates that substantial decreases in smoking-attributable morbidity and health-care costs likely would occur (2,4,10).

Acknowledgments

Ryan Patrick, Blake Kline, The MayaTech Corporation, Silver Spring, Maryland.

References

  1. CDC. Reducing tobacco use: a report of the Surgeon General. Atlanta, GA: US Department of Health and Human Services, CDC; 2000. Available at http://www.cdc.gov/tobacco/data_statistics/sgr/2000/complete_report/index.htm. Accessed March 26, 2012.
  2. Institute of Medicine. Ending the tobacco problem: a blueprint for the nation. Washington, DC: The National Academies Press; 2007. Available at http://www.nap.edu/catalog.php?record_id=11795. Accessed March 26, 2012.
  3. CDC. State cigarette excise taxes—United States, 2009. MMWR 2010;59:385–8.
  4. CDC. Best practices for comprehensive tobacco control programs—2007. Atlanta, GA: US Department of Health and Human Services, CDC; 2007. Available at http://www.cdc.gov/tobacco/stateandcommunity/best_practices/index.htm. Accessed March 26, 2012.
  5. CDC. State smoke-free laws for worksites, restaurants, and bars—United States, 2000–2010. MMWR 2011;60:472–5.
  6. Farrelly MC, Nimsch CT, James J. State cigarette excise taxes: implications for revenue and tax evasion. Final report: prepared for Tobacco Technical Assistance Consortium. Research Triangle Park, NC: RTI International; 2003. Available at http://www.rti.org/pubs/8742_excise_taxes_fr_5-03.pdf. Accessed March 26, 2012.
  7. The Associated Press. New Hampshire debates a reduced cigarette tax. New York, NY: The New York Times. March 19, 2011. Available at http://www.nytimes.com/2011/03/20/us/20budgets.html. Accessed March 26, 2012.
  8. Sanborn A. Tobacco price increase offsets N.H. tax cut. Portsmouth, NH: The Portsmouth Herald. July 24, 2011. Available at http://www.seacoastonline.com/apps/pbcs.dll/article?aid=%2f20110724%2fnews%2f107240318%2f-1%2fnewsmap. Accessed March 26, 2012.
  9. Landrigan K. 4 months in, cigarette tax cut no help. Nashua, NH: Nashua Telegraph. November 3, 2011. Available at http://www.nashuatelegraph.com/newsstatenewengland/938717-227/4-months-in-cigarette-tax-cut-no.html. Accessed March 26, 2012.
  10. Lightwood JM, Dinno A, Glantz SA. Effect of the California Tobacco Control Program on personal health care expenditures. PLoS Med 2008;5:e178.

* Available at http://www.cdc.gov/tobacco/statesystem.

In related developments in 2011, the District of Columbia established a separate cigarette sales tax of $0.36 per pack to be charged in addition to its excise tax of $2.50 per pack, and Louisiana voters approved a measure that will prevent $0.04 of the state's cigarette tax from expiring in 2012.

§ Additional information available at http://admin.state.nh.us/accounting/fy%2012/monthly%20rev%20february-12.pdf.


What is already known on this topic?

Increasing cigarette excise taxes directly increases the price of cigarettes, thereby reducing the demand for cigarettes, and ultimately, smoking-related death and disease.

What is added by this report?

During 2010–2011, eight states increased their cigarette excise taxes and one state (New Hampshire) decreased its cigarette excise tax, increasing the mean state cigarette excise tax from $1.34 in 2009 to $1.46 in 2011.

What are the implications for public health practice?

Eight states increased their cigarette excise taxes during 2010–2011, fewer than in 2009, when 15 states increased their excise taxes. Previous evidence indicates that further increases in cigarette prices would be expected to reduce cigarette use and smoking-attributable deaths, diseases, and health-care costs.


TABLE. Current state excise taxes per pack of 20 cigarettes, amount of change during 2010–2011, and percentage change from 2009 to 2011 — United States, December 31, 2011

State

2011 tax ($)

Change during 2010–2011 ($)

Change from 2009 to 2011 (%)

New York

4.35

1.60

58.18

Rhode Island

3.46

— 

Connecticut

3.40

0.40

13.33

Hawaii

3.20

0.60

23.08

Washington

3.025

1.00

49.38

New Jersey

2.70

 —

Vermont

2.62

0.38

16.96

Wisconsin

2.52

— 

Massachusetts

2.51

— 

District of Columbia*

2.50

14.40

Alaska

2.00

— 

Arizona

2.00

— 

Maine

2.00

— 

Maryland

2.00

— 

Michigan

2.00

— 

Montana

1.70

— 

Utah

1.70

1.005

144.60

New Hampshire

1.68

-0.10

-5.62

New Mexico

1.66

0.75

82.42

Delaware

1.60

— 

Pennsylvania

1.60

— 

South Dakota

1.53

— 

Texas

1.41

— 

Iowa

1.36

— 

Florida

1.339

— 

Ohio

1.25

— 

Minnesota

1.23

— 

Oregon

1.18

— 

Arkansas

1.15

— 

Oklahoma

1.03

— 

Indiana

0.995

— 

Illinois

0.98

— 

California

0.87

— 

Colorado

0.84

— 

Nevada

0.80

— 

Kansas

0.79

— 

Mississippi

0.68

— 

Nebraska

0.64

— 

Tennessee

0.62

— 

Kentucky

0.60

— 

Wyoming

0.60

— 

Idaho

0.57

— 

South Carolina

0.57

0.50

714.29

West Virginia

0.55

— 

North Carolina

0.45

— 

North Dakota

0.44

— 

Alabama

0.425

— 

Georgia

0.37

— 

Louisiana*

0.36

— 

Virginia

0.30

— 

Missouri

0.17

— 

State mean

1.46

* In related developments in 2011, the District of Columbia established a separate cigarette tax of $0.36 per pack to be charged in addition to its excise tax of $2.50 per pack, and Louisiana voters approved a measure that will prevent $0.04 of the state's cigarette tax from expiring in 2012.


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