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tax increases

Federal Excise Tax Increase

On April 10, 2013, President Obama released his 2014 federal budget proposal, which would significantly increase the federal excise tax on a pack of cigarettes by 94¢ to $1.95 per pack—roughly a 93% increase—nearly doubling what adult tobacco consumers would pay in federal taxes alone on cigarettes!  It would also increase federal excise taxes on other tobacco products by a similar percentage. This tobacco tax increase was recently reissued in President Obama’s 2015 budget and remains a threat to your business.

Here's what the trend in federal cigarette excise tax increases looks like:

  • In 2000, the federal excise tax on cigarettes went from 24¢ to 34¢/pack ($3.40 a carton).
  • In 2002, the federal excise tax on cigarettes went from 34¢ to 39¢ per pack ($3.90 per carton).
  • In 2009, only five years ago, when the tax stood at 39¢/pack, the largest federal tobacco tax increase in history raised it to $1.01/pack (more than $10 a carton!).
  • Now, if the President's budget proposal passes, that number would skyrocket to $1.95/pack (almost $20 a carton!).  After 2014, the tax rate would increase again each year automatically in an amount indexed to the inflation rate.

TAKE ACTION TODAY!

If Congress approves the President’s budget plan, federal excise taxes on cigarettes will have increased almost ten-fold in just over a decade, going from 24¢/pack in early 2000 to the nearly $2.00/pack this year.  And that’s on top of 120+ state cigarette tax increases we have seen since 2001.

The average price of a pack of cigarettes in the U.S. is now $6.19, of which nearly 55% ($3.34) is government taxes and fees.  The President's proposed tobacco tax increase will dramatically impact those costs.  If the 94¢/pack increase passes, the government’s share will increase to more than 60% ($4.28) of the sale price.

We all know how these kinds of tobacco tax increases affect not only adult tobacco consumers, but retailers, wholesalers and other local businesses as well.

This op-ed by Lyle Beckwith, Senior Vice President of the National Association of Convenience Stores, also highlights how these kinds of tobacco tax increases actually benefit the black market, which may have negative impacts on efforts to prevent underage tobacco use, and can harm tobacco retailers. 

Tobaccoissues.com will keep you updated on the progress of the President's proposed tax increase and let you know what retailers and wholesalers can do to help fight it.

Sign our petition to say Enough is Enough and help us stop this massive and unfair tax hike on tobacco products! 

State and Local Tobacco Tax Increases

The Issue:

In recent years, many state and local governments have raised tobacco taxes to help balance their budgets and help fund new programs:


  • Hundreds of cities, towns, and counties also impose local cigarette excise taxes.
  • Since FY 2000, federal and state governments have increased their cigarette excise tax rates more than 120 times.  Numerous localities have increased local excise tax rates as well.
  • More than half of the average price of a pack of cigarettes now goes to the government in taxes and other fees.

Why Tobacco Tax Increases Matter to You


  • Increased tobacco excise taxes can hurt your business by driving adult tobacco consumers to other sources such as across state and municipal borders to purchase lower priced tobacco—while there, they may purchase other retail products, such as milk, bread, and gasoline as well.  This results in lost sales and revenue, not only for retailers, but local municipalities and states as well.
  • Cigarette and other tobacco product sales account for over 40% of all in-store sales at convenience stores nationwide, according to the National Association of Convenience Stores.  
  • Cigarette tax increases can create additional incentives for criminal activity, including contraband and counterfeit tobacco product trafficking.
  • Cigarette sales in the U.S. continue to decline each year.  This can create funding shortfalls in state and local programs that rely on cigarette tax revenues.  Those revenue gaps then create pressure for additional tax increases.
  • Tax increases are not the answer, especially in this economic climate.  States and municipalities continue to face budget deficits, and more tobacco tax hike proposals are likely.  Instead, our legislators should focus on ways to get their state budgets and spending under control.