New Federal Tobacco Tax Means Michigan Smokers Getting Double Taxed
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As the Federal Tax on tobacco increases, Michigan smokers become affected by a double tax on tobacco.
According to the U.S. Department of Treasury, on April 1st of this year the Federal Government will be raising the tax on a pack of cigarettes from 39 cents per pack to $1.01 per pack. Federal taxes on all tobacco products will be rising dramatically as well. Cigars, snuff, pipe tobacco, chewing tobacco, rolling tobacco and all rolling accessories will be taking a serious hit. The primary reason given for raising the federal taxes on tobacco products is for expanding low-income children’s health insurance.(SCHIP)
Federal Tobacco Tax Increases:
Large cigar tax will go up to about 40 cents per cigar from a nickel per cigar.
Small cigar tax will go up to a $1 per pack from 4 cents.
Pipe tobacco tax from $1.10 per pound to $2.83 per pound.
Chewing tobacco tax from 19.5 cents to 50.3 cents per pound.
Snuff tax from 53.5 cents to $1.51 per pound.
Loose tobacco tax (roll your own) from $1.10 to $24.78 per pound.
In a recent Detroit News article by Chris Christoff, it was noted that Michigan’s Governor Granholm also wants to double the Michigan state tax on all tobacco products. (This is except for the already in place $2 per pack manufactured cigarette tax.) These new taxes are being implemented to help balance next years dismal state budget. Once the Legislature approves this, the tobacco items tax will jump from 32% to 64% on wholesale prices.
In Michigan, the folks that roll their own will be getting hit the hardest. With the combined Federal and state tax, the average price of popular rolling tobacco will go up from about $20 per one pound bag to $70 per bag. This will change the total price for rolling your own quite substantially. The current cost for rolling your own is about $1 per pack when buying a one pound bag of tobacco. Once all the taxes go into effect, the price will jump to about $3 per pack.
So what happens now is still unclear. The tobacco shop retailers in Michigan are expecting a large decline in business. Rolling tobacco use has been picking up steadily over the past several years due to the past cigarette tax hikes. Another tax hike will probably increase the amount of traffic to neighboring states where the cigarette taxes are lower and the prices per pack make it economical to stock up and bring them back. Smuggling cigarettes increased substantially with the last large tax hike, and is expected to do the same this time around. Also, an expensive boost to people’s willpower should cause a lot of folks to drop the habit once and for all. With the cost of a pack of cigarettes going to about $6 per pack in Michigan, time will tell if a 50% savings with roll your own supplies will bring in as much revenue as 80% savings did. Or will so many people quit that the increased tax revenues are offset by those dropping the habit completely? We should know sometime next year.
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6 Comments
Get Job everyone who elected Obama! He and Grandholm are quiet the pair There taxing us to death and just think when they loose the tax money from cigarette\’s what do you think will happen then? They wont like it and will just move the lost money to something else. Job security stinks now were giving money to banks so they can be stable. They want to ban smoking every where thus adding to unemployment in the south Cigarette companies to farmers which will kill small business (Bars) you know places to go relax. The price of gas has caused all of this they let it raise to $4.00 a gallon last year and this raised the cost of everything. Now I have just got 5% cut in my wages utilies keep increasing theyre cost so no body will be able to afford anything at all. I really believe that they are a bit backwards in theyre thinking! They keep raising the tax on cigarettes thing will get worse.
Obama wasn’t in when gas went to $4 a gallon. I don’t smoke or drink but think the state tax sends things way overboard. The per pack federal tax would not increase the cost of a pack of cigarettes that much. It’s the people rolling that will be hurt. I rolled for years before I quit smoking and it was only costing me $1 a pack or so. It was not the cost that made me quit. It was my health and welfare, and I’m not sorry I quit–I could always go back. I watched my father die from smoking and probably from drinking, my brother die from lung cancer, and a brother-in-law die of lung cancer.
But the tax is still out of whack! People are more likely to quit for themselves than they are out of the cost. Meanwhile, they will suffer the high and unfair cost of a greedy government who funds AIG executives.
The U.S government sucks hog balls.
Maybe Granholm can pay to get the big ugly wart burned off her face now with all that extra tax money.
Revolution is the ONLY solution.
Well, I guess the government felt that criminal gangs weren’t making enough money. This will provide criminal gangs a massive increase in income by smuggling tobacco, as if they weren’t already causing enough problems with trafficking in cocaine & heroin. With the massive increase in money the gangs will have available, the cops will have to deal with huge increases in heavily-armed gangs. Heck, the gangs might soon be able to buy their own armored vehicles ad helicopters! Brilliant move, politicians!
If everyone quit smoking? And the deal on banning smoking in places of interest. The people that don’t smoke should stay out, if it bothers them that much.