The Economic Impact of a 45 Cent Tobacco Tax Increase

Despite a surplus of more than $1.3 billion in tax revenues for 2006, lawmakers in Columbia are looking to increase taxes on cigarettes by 45 cent a pack. Not satisfied with nearly $30 million dollars in cigarette tax revenue for 2006, policy makers plan to roll out a regressive tax that will cost the state hundreds of jobs and millions of dollars in the sales of both cigarettes and related products. While cigarette taxes are unlikely to substantially decrease smoking, hikes will likely decrease future state revenues by driving sales to out-of-state or to Internet and illicit vendors.

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