How does tobacco tax work?

Taxes are calculated on every cigarette distributed in California. Cigarette distributors pay taxes by purchasing tax stamps for cigarettes from the CDTFA. Distributors must place the tax stamp on each pack of cigarettes before distributing them. Increasing taxes on tobacco products, leading to an increase in their price, makes tobacco less affordable.

When tobacco becomes less affordable, people consume it less and young people are prevented from initiating. Because young people and low-income groups respond better to increases in tobacco prices, they disproportionately enjoy the economic and health benefits of quitting smoking and not starting. The American Lung Association strongly supports national, state and local efforts to increase taxes on cigarettes and tobacco products. Twenty-one states and Puerto Rico have defined special taxes on certain types of non-combustible tobacco, such as chewing tobacco and dry and wet tobacco.

Six states (Arizona, Kentucky, Maine, Pennsylvania, Texas and Vermont): Guam, the Marshall Islands and Palau impose taxes per ounce. In the STATE System, excise taxes on tobacco products are included for combustible and fireproof (smokeless) tobacco. Every state and the federal government can achieve significant health and income gains by further raising tobacco taxes. Three states (Pennsylvania, Texas and Vermont), the Marshall Islands and Palau, tax dissoluble assets by the ounce.

Two states (North Dakota and Rhode Island), the Marshall Islands and Puerto Rico, do not impose taxes on rolling cigarettes. The Lung Association has had great success recently in raising the price of tobacco products, as 49 states and the District of Columbia have increased their taxes on cigarettes since 2002, many more than once. There are five types of products within the non-combustible tobacco category, and states can tax all products equally under a broad definition or separately, citing specific product types. Tobacco tax increases offer a win-win solution for all states, as they work to improve residents' health and balance budgets.

Sixteen states (California, Hawaii, Illinois, Iowa, Massachusetts, Minnesota, Nebraska, New Hampshire, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, Utah, Vermont and Washington), American Samoa, the District of Columbia, Guam and Puerto Rico tax small cigars such as cigarettes. Four states (Alabama, Connecticut, New Hampshire and North Dakota): American Samoa, the Northern Mariana Islands and Puerto Rico do not pay taxes. WHO supports all its Member States in using tobacco taxes to meet their health, income and equity objectives.

Glenna Penrod
Glenna Penrod

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