The consequences of increased tax rates may include the following:
- The regressive nature of cigarette and tobacco taxes on lower income individuals will be magnified.
- Consumers will seek out lower-priced sources of cigarettes and tobacco products in neighboring states, on the internet or from illicit markets.
- Lower sales will result in lost retail income that could result in employee job losses and potential store closures.
- States that increase cigarette and tobacco tax rates could collect less in excise tax revenue than before the tax increases, placing further downward pressure on budget deficits.
Now is the time for retailers to call and email state lawmakers and express their concerns about future cigarette and tobacco product tax increases. The contact information for state legislators is listed on each state’s legislative website. Taking a few minutes to make a phone call or compose an email could have a positive impact on the eventual outcome of what is sure to be a number of bills introduced in 2021 to raise cigarette and tobacco product tax rates.
This story first appeared in the January/February 2021 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.
– Contributed by Thomas Briant, Executive Director, National Association of Tobacco Outlets (NATO)
