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Four states prepare for tobacco tax vote


 Voters in four states to decide the fate of tobacco taxes on November 8.

Update 11.10.2016: Voters in California have approved Proposition 56. The Colorado, Missouri , and North Dakota measures were both defeated.

On November 8, the citizens of the United States will elect a new president. But for some, November 8 has additional significance: it’s the day residents of four states will vote on proposed tobacco tax increases.

In California, Proposition 56 would increase the cigarette tax by $2.00 per pack. Taxes on other tobacco products, including electronic cigarettes, would see a similar rate increase.

Colorado’s Amendment 72 would increase the cigarette tax by $1.75 per pack. The tax on other tobacco products would increase by 22% of the manufacturer’s list price.

There are two proposed tax increases on the November ballot in Missouri. Should both pass, the one with the most affirmative votes will win:

  • Amendment 3 would increase the tax on a pack of cigarettes from 17 cents to 77 cents by 2020. It would also impose a fee on tobacco wholesalers (initial rate of 67 cents per pack).
  • Proposition A would increase the tax on a pack of cigarettes by 23 cents by 2021 and add an additional 5% tax on other tobacco products.

Finally, North Dakota’s Initiated Statutory Measure 4 would allow the state to increase taxes on tobacco products and use the generated tax revenue to fund veteran and health services. It would also repeal an exemption for cigarettes and tobacco products currently allowed for occupants of the State’s veterans’ home and state hospital. The excise tax on tobacco products would increase from 28% to 56% of the wholesale purchase price.

The tobacco industry is battling all proposed tax increases but is focusing efforts on defeating the California measure. Although California currently has relatively low tobacco taxes ($0.87 per pack), it was the first state in the nation to ban smoking in bars and restaurants and is seen as a trendsetter. If the proposed tax increase passes here in spite of the more than $55.9 million the tobacco industry has spent to defeat it, other states could be encouraged to pursue similar tax increases.

Earlier this year, California Governor Jerry Brown (D) raised the smoking age to 21 and cracked down on e-cigarettes. However, he vetoed a bill that would have granted localities the right to impose their own tobacco taxes.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.