Low-Income Smokers Facing Heavy Taxes
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There has not been much discussion in the media about the new tax on the lower-income Americans as a result of the federal tax increase effective April 1 on cigarettes. The federal tax will increase by 61 cents from the current 39 cents to $1 per pack of cigarettes, a 156 percent increase.
As a result of the pending tax increase, it is expected that the number of smokers will decline. Historically, a 10 percent increase in the price of cigarettes results in a 4 percent decline in the number of smokers. Cigarette manufacturers, sensing the pending reduction in the number of smokers, have raised their prices in advance of the increase an average of 40 to 70 cents per pack.
The states, who derive significant revenues from smokers, are wondering what to do, since the number of smokers will decline. Many states are also raising or planning to raise their taxes due to pending revenue decreases.
Since it is estimated that 50 percent of the smokers are low-income, a pack-a-day smoker will see an increase of at least $1 to $1.30 per pack per day (plus the proposed $1 increase of the North Carolina tax) as a result of one initial tax.
Cigarettes could effectively double in price in North Carolina! In after-tax dollars, this pretty much eats up the tax reduction at the middle income level. Is there no outcry for taking advantage of the lower-income citizens who legally smoke?
For those who despise smoking, there is probably not much sympathy, but the trends should be increasingly clearer to those who consume alcohol, do not eat the right foods, drive too much or create carbon by consuming too much electricity. All these habits are in sight.
Brad Kocher
Pinehurst
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