On April 1, 2009, the federal cigarette tax increased from 39 cents to $1.01 per pack, resulting in an increase of $6.3 billion according to the Tax Foundation in Washington D.C.
Increased tax revenue will be used for the federal State Children's Health Insurance program. However, there will be a corresponding reduction in the amount of disposable income of residents across America. In Wisconsin, the increase in federal cigarette taxes will be $117,357,576.
Fewer cigarettes will be sold. Cigarette purchases will drop by about 10 percent.
The federal cigarette tax increase also impacts state and local government revenues. Revenue lost by state and local governments in Wisconsin resulting from the 62-cent federal cigarette t ax increase for Fiscal Year 2010 (July 1, 2009 - June 30, 2010) will be $70,919,000.
Governor Doyle’s proposed 75-cent cigarette tax increase would only make matters worse. Under Doyle’s proposed state budget, the state cigarette tax would increase to $2.52 a pack, causing Wisconsin to jump from the 15th highest state tax to the third behind only New York ($2.75) and New Jersey ($2.58). Wisconsin’s total tax, combined with the federal tax increase that went into effect this month would be $3.53.
Read more from the Tax Foundation.
