Proposed Federal Tobacco Tax Could Result in 50% Increase in State Taxes & Retail Prices

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Proposed Federal Tobacco Tax Could Result in 50% Increase in State Taxes & Retail Prices

Proposed Federal Tobacco Tax Could Result in 50% Increase in State Taxes & Retail Prices

 

ASHNGTON, D.C. — While no tax hikes are set in stone, a proposal to increase the federal excise tax for tobacco products could have a dramatic impact at retail.

The Tobacco Tax Equity Act of 2021 would close tax code loopholes for tobacco products by increasing the federal tax rate on cigarettes, pegging it to inflation and setting the federal tax rate for all other tobacco products at this same level. It is part of the federal $3.5-trillion reconciliation package.

According to the Tax Foundation, the federal proposal would have significant implications on the availability of non-cigarette tobacco products and call for a potential federal increase of more than 1,600 percent on moist snuff — a hike that could result in state taxes and retail prices increasing by more than 50 percent in certain states.

Notably, Massachusetts tobacco consumers would pay more than $20 for a can of moist snuff, said the Washington, D.C.-based nonprofit.

 

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