7/03/2007

Cigarette tax hikes lead the pack

Tobacco taxes in many states have risen in the last year while gas and sales taxes have held steady, says a new nationwide survey.

Smokers have seen even more of their money go up in flames as state cigarette taxes continued to rise over the last year, according to a new survey.

Sales and gasoline taxes have mostly held steady, however, said the report by CCH, which provides tax and accounting information.

Ten states have raised their rates on cigarettes over the last year, it found. Arizona had the largest cigarette tax increase - a boost of 82 cents to $2.00.

There are now 8 states that charge more than $2.00 per pack, and New Jersey's $2.58 rate is the highest in the nation. A majority of states now have rates over 80 cents per pack.

"Cigarettes continue to be targeted for some hefty tax increases," CCH State Tax Analyst Dan Schibley said in a statement. "By contrast, the vast majority of states are standing pat on gas and sales taxes."

Seven states raised their gasoline taxes compared to a year ago, with the largest being a 2-cent hike in Washington state.

The lowest per-gallon tax was found in Georgia at 7.5 cents, while Washington has the highest at 36 cents per gallon. More than half of states have a rate less than 20 cents per gallon.

Sales taxes remain the largest revenue generators for states that have them. Mississippi, New Jersey, Rhode Island and Tennessee have the highest rates at 7 percent. Colorado has the lowest at 2.9 percent.

Only five states - Alaska, Delaware, Montana, New Hampshire and Oregon - do not have a sales tax.

Cheap states for cheapskates

Some states use their lower tax rates to stand out from their neighbors. Residents on the Michigan-Wisconsin border can save $1 per pack if they buy the cigarettes in Wisconsin.

On the East Coast, it's $20 cheaper per carton to buy cigarettes in Delaware compared to New Jersey.

Washington state has high taxes on gas and cigarettes, so some people opt to buy the same items in neighboring Idaho and Oregon.

But it doesn't usually make sense to drive across state lines to find a better rate on the gas tax.

"With gas averaging close to $3 a gallon nationwide, your car would have to get phenomenal mileage to justify driving any distance just to save a few cents per gallon on the gas tax," said Schibley. Top of page

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