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Cigarette Tax Increase Has Smokers Coughing It Up

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By Admin on March 30, 2009 11:06 AM

If you're a smoker, now may be a good time to try to kick the habit, because a bump in the federal tax on cigarettes goes into effect this week, raising the federal tax per pack from 39 cents to $1.01.

The increase in the federal tobacco tax is a part of the Children's Health Insurance Program Reauthorization Act of 2009, which was signed into law in February. The Act calls for an increase in the federal excise taxes on all tobacco products, including cigarettes, cigars, rolling papers, and chewing tobacco. The federal tax on a pack of cigarettes will be over $1.00 as of April 1st, and anyone buying a carton of cigarettes will end up paying over $10 in federal taxes.

According to the Wall Street Journal, both tobacco companies and anti-smoking groups are trying to angle the tax hike to their advantage: "Major cigarette makers raised prices in recent weeks, partly to offset any drop in profits once the per-pack tax climbs from 39 cents to $1.01. Medical groups, meanwhile, see a tax increase in the middle of a recession as a great incentive for smokers to quit."