New York Hikes Cigarette Taxes

By: - June 22, 2010 12:00 am

Add New York to the list of states raising the price of cigarettes to fill budget gaps.

The legislature approved a party-line measure Monday night that would raise the tax by another $1.60, pushing the excise tax on a pack of cigarettes to $4.35, the Albany Times Union reports. Starting July 1, the average pack will cost $9.20 in the state and almost $11 in New York City which levies its own tax, according to The New York Times. The price of smokeless tobacco, cigars and dips will also go up.

More costly cigarettes are expected to generate about $440 million in revenue for a state that has been working to close a $9 billion budget gap. The state’s budget is more than two months overdue and lawmakers argued the tax increase was necessary to keep government open. The legislation also includes a controversial provision to tax cigarettes sold on Indian reservations.

Almost every state has raised tobacco taxes over the past eight years, and 14 did so last year to buttress their budgets against the recession. State cigarette taxes average $1.42 per pack, according to the Campaign for Tobacco-Free Kids, but rates vary considerably, with tobacco-producing states such as North Carolina and Virginia levying far less. New York’s tax increase propels it to the top of the list.

So-called “sin taxes” on cigarettes and alcohol are popular in difficult fiscal times, but New York has taken the concept further. Gov. David Paterson has been pushing for a penny-per-ounce tax on soda, which would raise about $1 billion. Paterson has also called for a $1 cigarette tax increase, lower than the increase the legislature ended up passing.

“You’ve never met a tax you didn’t like,” Assemblyman Jim Hayes, a Buffalo Republican, told Democrats, according to the Times. “The governor proposed a buck. You hiked it to a buck sixty.”

Last year, cigarette taxes went up in Arkansas, Connecticut, Delaware, Florida, Hawaii, Kentucky, Mississippi, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, Vermont and Wisconsin, according to the Centers for Disease Control and Prevention.

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