The impact of higher cigarette taxes

By: Emily Makings
12:00 am
April 14, 2015

Jan Teague of the Washington Retail Association had an op-ed in the Everett Herald yesterday on the implications of increasing the state cigarette tax. (Gov. Inslee included an increase in his budget proposal.)

Teague writes about the impact on retailers:

Cigarettes are also the top revenue generator for many small businesses, accounting for nearly 32 percent of in-store sales, according to the National Association of Convenience Stores. Raising cigarette taxes, such as the 50-cents-a-pack increase under consideration in Olympia, will hurt legitimate retailers as adult smokers shift purchases to the other sources.

Those other sources include smuggling. The Tax Foundation reported in February that Washington already has the 3rd highest smuggling rate in the country — in 2013, smuggling accounted for 46.4 percent of cigarette consumption in Washington, up from 38.2 percent in 2006. Washington’s cigarette tax is the country’s 5th highest; adding 50 cents would make it the 2nd highest.

Categories: Categories , Tax Policy.