Cigarette Tax Increases: Cautions and Considerations

As states deal with their fiscal crises and search for ways to close large gaps between revenues and expenditures, few states have yet enacted significant tax increases — with the exception of cigarette tax increases. So far this year, 14 states have increased their excise taxes on cigarettes, and cigarette tax increases are under active consideration in several other states. Before the year is over, it is likely that at least one-third of the states will have enacted cigarette tax increases. The willingness to increase cigarette taxes may be due in large measure to the fact that people don t mind cigarette tax hikes; smoking is acknowledged to be bad for health and so most people think it is reasonable for governments to tax this type of bad behavior.