Different rates in different states

 By Katie Wildes

In New York City you can buy a pack of Marlboro cigarettes at a 7-Eleven for $15.85. In Arizona, just over $9.65 would be enough for you to light up. At South River Market in Rockbridge County, Va., you need a mere $5.27.

Marlboro is a popular brand of cigarettes wherever you go. But how could the price be so drastically different from one state to another?

The answer is taxes. Cigarette taxes vary widely across state lines. Each pack bears a federal cigarette tax of $1.01, but states—and in some cases municipalities—are free to levy whatever rates they want.

New York

New York has the most extreme tax for this habit. In 2010, the “Empire State” raised the tax by $1.60—each pack now carries a $4.35 tax overall and it’s even higher in Manhattan, which stands at $5.85.

One incentive to raise the tax was to encourage people to quit smoking, but another was to raise state revenue for health care.

While New York’s smoking rates dropped slightly, now 14.4 percent from 16 percent three years ago, the revenue generated from the cigarette tax plummeted dramatically. New York State Comptroller Tony DiNapoli reported that revenue from cigarette taxes has dropped by $400 million since the tax increase in 2010, about a 69 percent decrease.


On the other end of the spectrum are Virginia and Missouri. They have the two lowest cigarette taxes in the nation—30 cents per pack and 17 cents per pack, respectively.

Missouri is not a big tobacco state, which makes some curious about its low tax. Even the biggest tobacco states of Kentucky, North Carolina and Georgia have rates more than twice the level of Missouri—and more than 50 percent higher than the level of Virginia. Proposals to increase the tax have been made several times in Missouri, but the Republican-controlled general assembly has not been in favor of tax hikes.

As a result, several organizations proposing raises are appealing directly to voters this fall. Their initiatives will be on the 2016 general election ballot.

One ballot item will present an initiative for a 23 cent-per-pack increase in the cigarette tax, phased in from 2017 to 2021. Others would raise the cigarette tax to 60 cents, according to the Associated Press.

One of those 60-cent proposals is by Raise Your Hand for Kids, a nonprofit organization in Missouri that promotes early childhood education.

Erin Brower, the vice president of the organization, said she believes the Master Tobacco Settlement in 1998 caused a loophole in Missouri’s legislation and is the reason for the tax remaining so low.

Erin Brower, vice president of Raise Your Hand for Kids

Erin Brower, vice president of Raise Your Hand for Kids.

The settlement, between attorneys general of 46 states, five U.S. territories, the District of Columbia and the five largest tobacco companies in America, forced existing tobacco companies to change how they advertised and to pay millions of dollars to states for medical costs related to smoking-related illnesses and to anti-smoking advocacy groups.

The problem was that this settlement only applied to existing tobacco companies. Since then, every state, except Missouri, has adjusted its legislation to apply to all tobacco companies, not just the companies in the settlement. Missouri has not done this.

Small tobacco companies in Missouri can sell extremely cheap cigarettes. Since 1998, they have fought off any legislation that would raise their prices and make them more competitive with big-name tobacco. Big tobacco has advocated closing the loophole, which would increase the competition.

Brower said the last proposal to increase the tax to 73 cents in 2012 came close to passing, but getting a bill passed is a big fight.

“When proposing a raise, you have to ask if you are only including the cigarette tax raise, or are you going to include the language that closes the loophole,” she said. “You are thinking ‘do you want the support of big or little tobacco?’”

If you try to avoid closing the loophole, small tobacco may support the bill, but if you try to close the loophole, big tobacco will give support.

There is no limit to campaign contributions in Missouri and small tobacco lobbyists are a big presence. Therefore, Brower said, their influence on legislation is powerful. “Small tobacco will fight until the end for prices not to be raised.”

Raise Your Hand for Kids has been working for over two years to create a moderate bill with an increase to 60 cents per pack, implemented over four years. The organization has gathered 320,000 signatures and is hopeful a large turnout of voters in the 2016 general election could push forward their initiative.

“It is going to be a big fight,” Brower said.


Virginia last increased its cigarette tax in 2005, and that was an increase of only 10 cents—much less than what most other states have done. Along with being a tobacco-growing state, Virginia is home to cigarette manufacturing giant Philip Morris, whose parent company is Altria. Philip Morris donates to many politicians in Virginia, both Republican and Democratic, according Altria’s website.


Made with Easelly

Just as in Missouri, several attempts at raising the tax in recent years have been proposed. However, they all have failed.

Due to Virginia’s low tax rates and New York’s high tax rates, cigarette smuggling has become a big issue. More than 10 million cartons a year from Virginia are illegally trafficked or resold in another state, according to The Roanoke Times.

“Virginia is concerned about cigarette smuggling, whether it is interstate or intrastate, because it is criminal activity, and it tends to foster other types of criminal activity,” a spokeswoman for the Virginia Department of Taxation said.

The department is aware that smuggling exists as a result of different tax rates in different jurisdictions in Virginia and across the country.  “A rate change in one jurisdiction can’t be viewed in isolation. Differences in tax rates, distance, and varying levels of law enforcement all affect smuggling activities,” said the spokeswoman.

While states with higher cigarette taxes have seen an increase in smuggled cigarettes, they have seen a decrease in their smoking rates. There is a correlation between higher taxes and lower smoking rates. New York has a smoking rate of 14.4 percent, while Missouri’s rate is 22.1 percent and Virginia’s is 19.5 percent, according to the Centers for Disease Control and Prevention.


Louisiana has a smoking rate of 21.7 percent and has been working to decrease it. In the past year, Louisiana has raised its cigarette tax twice.

In July of 2015, the tax was raised 50 cents, making the tax 86 cents. This past April, the Louisiana House of Representatives approved a 22-cent increase, making the tax $1.08.

In addition to the tax hikes, New Orleans chose to become 100 percent smoke-free as of April 2015.


Made with Easelly

Cynthia Hallett, executive director of Americans for Nonsmokers’ Rights, said, “New Orleans did it at the local level. It was quite a contentious campaign.”

Rooms with proper ventilation and that were structurally separated from main areas were permitted to have smoking before New Orleans became smoke free. Bars and casinos have been added to the list of places where smoking is banned. Previously, Louisiana declared restaurants, hotels, hospitals and other public areas as smoke free.

Virginia is not totally smoke free and not all local governments have not taken the initiative to become smoke free.

Smokers can smoke in Lexington, Va., if there are designated smoking rooms. However, smoking issues and cigarette taxes have not been a hot topic in Lexington politics. Noah Simon, city manager, said that Lexington does not sell enough cigarettes to impose a local cigarette tax.

Sen. Creigh Deeds, a Democrat from the 25th District, which includes Rockbridge County, explained that local cigarette taxes are more often proposed and put into place in bigger cities and towns. Therefore, it is not surprising that Lexington currently does not have one.