NCPA - National Center for Policy Analysis

Where Would States' Finances Be Without Tobacco?

July 1, 2002

As states confront their worst budget crises in a decade, they are looking to the tobacco whipping-boy to bail them out.

  • Eleven states this year have raised their cigarette taxes -- and more than a dozen others are considering doing the same.
  • While the tobacco settlement was supposed to spread about $246 billion to states over 25 years, some states are trading future payments for cash now.
  • Anti-smoking activists are dismayed to see settlement money being diverted from smoking cessation programs to quick budget fixes.
  • And it apparently makes little difference to state lawmakers that the burden of increases in cigarette taxes falls more heavily on poor people, critics say.

New York now has the highest cigarette taxes in the nation -- at $1.50 a pack. In seven other states, taxes are $1 a pack or more. Virginia, on the other hand, charges just 2.5 cents a pack -- making it a destination of choice for smokers in Washington, D.C., where the tax is 65 cents a pack.

Source: Robert E. Pierre, "Tobacco Tempts States in Financial Need," Washington Post, June 30, 2002.


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