New York & D.C. Charge Highest Taxes on Cigarettes

The state of New York is from September 1 beginning to charge a $5.35 tax per pack of 20 cigarettes - a $1.00 increase that makes the state's excise tax officially the highest in the country.

Proponents of the change are saying that higher prices have proven to reduce smoking and save lives, while skeptics of tax hikes like the Tax Foundation are citing a $32 million negative revenue impact for the industry as well as potentially increased smuggling into the state which is already losing an estimated $1 billion per year from illicit trade across state borders.

The average smoker will likely bemoan the increased strain on their personal budget. An analysis of CDC data provided by Wisevoter, however, shows that higher taxes and higher cigarette prices are not in a linear relation and that some states retained relatively low prices despite higher taxes. While in New York state half of the average price for a pack of cigarettes consisted of taxes as of May, leaving a margin of $5.17 of the average sales price of $10.53 after tax, these numbers stood at around two thirds in taxes and a $2.16-$2.50 post-tax margin in Maryland and Oregon - potentially taking into account that both states have neighbors where cigarettes can be had significantly cheaper. In Missouri, the state where cigarettes cost the least, taxes made up 24 percent of the price of a pack, but the post-tax margin stood at a relatively high $3.96 even after local tax taken into consideration.

The highest such margin was seen in Alaska at $6.54 - likely caused by high transportation costs affecting many goods in the state as well as a few steep local taxes (not shown in chart) that might have driven up averages across the state. Cities like Juneau and Anchorage as well as several Alaska boroughs charge additional cigarettes taxes of up to $3.00 per pack. The same is true of New York state, where 40 percent of the population are subject to the New York City cigarettes tax of an additional $1.50. Chicago is actually the place with the highest total cigarettes tax in the U.S., which consists of a $2.98 state tax, a $3.00 county tax and a 1.18 city tax. California does not actually allow local cigarette taxes on top of state taxes of $2.87, which caused San Francisco to issue a $1.25 cleanup fee per pack.

Previously to September 1, New York had shared the honor of the highest cigarettes excise tax with Connecticut. Before the New York increase, Washington D.C. had actually had a higher tax on cigarettes than any state at $4.50.