With the Democrats controlling both houses of Congress and the White House, this year has seen major federal tax and regulatory legislation signed into law that will dramatically impact the tobacco industry. On April 1, the largest tax increase on a single product in the history of the U.S. became law with the federal cigarette tax being raised 61 cents per pack, the large cigar tax more than doubling, the tax on little cigars being made the same as the cigarette tax, the excise tax on pipe tobacco, chewing tobacco and snuff almost tripling and the tax on roll-your-own tobacco increasing by the astronomical amount of $23.69 per pound.
In addition, Congress passed and President Obama signed into law sweeping new powers for the FDA to regulate the manufacturing, distributing, advertising and selling of cigarettes and smokeless products.
State Taxes
During 2009, cigarette tax increases were defeated or failed in 19 states and passed into law in 12 states. States where cigarette tax increases were not enacted include:
Alabama (32.5 cents per pack)
Connecticut (50 cents per pack)
Georgia ($1 per pack)
Kansas (95 cents per pack over six years)
Louisiana ($1 per pack and 50¢ per pack)
Maine ($1 per pack)
Maryland (75 cents per pack plus 27.5 cents per pack in three years)
Minnesota ($1 per pack)
Missouri (16 cents per pack)
Montana (17 cents per pack)
New Mexico ($1 per pack)
Oregon (60 cents per pack)
South Carolina (50 cents per pack increase)
Tennessee (20 cents per pack increase)
Utah ($1.31 per pack increase)
Virginia (89 cents per pack increase)
Washington ($1 per pack increase)
West Virginia (65 cents per pack increase)
Wyoming (50 cents per pack increase)
The 12 states that passed higher cigarette taxes were:
Arkansas (56 cents per pack increase)
Delaware (45 cents per pack increase)
Florida ($1 per pack increase)
Hawaii ($1 per pack over three years)
Kentucky (30 cents per pack increase)
Mississippi (50 cents per pack increase)
New Hampshire (45 cents per pack increase)
New Jersey (12.5 cents per pack increase)
North Carolina (10 cents per pack increase)
Rhode Island ($1 per pack increase)
Vermont (25 cents per pack increase)
Wisconsin (75 cents per pack increase)
Regarding increases on other tobacco, OTP tax hikes were defeated or failed in 15 states, but passed in 14 states. The states where OTP taxes stalled are Georgia, Indiana, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Montana, New Mexico, North Dakota, South Dakota, Utah, Virginia, Washington and West Virginia.
The 14 states that enacted higher OTP taxes or changed the method of moist snuff taxation included Arkansas, Florida, Hawaii, Kentucky, Maine, Nebraska, New Hampshire, New York, North Carolina, Oregon, Rhode Island, Texas, Vermont, Wisconsin and Wyoming.
State Smoking Restrictions
With regard to smoking restrictions, four states enacted new or modified smoking restrictions whereas bills to restrict smoking in seven other states did not pass. The smoking restrictions were passed in North Carolina (public places and workplaces), Vermont (extended ban to all workplaces), Virginia (bars, restaurants or lounges except ventilated rooms) and Wisconsin (bars, restaurants and workplaces except outdoor patios). Proposed smoking restrictions failed in Alabama, Kansas, Louisiana, Missouri, Oregon, Texas and Wyoming. In South Dakota, a statewide smoking ban passed but must now be placed as a question on an upcoming general election ballot.
Minimum Age
Bills to raise the minimum age to purchase and consume tobacco products have failed in Mississippi, New Hampshire, Rhode Island and Texas and legislation to raise the legal age remains pending in Alaska, Illinois, New York and Oregon.
