What Is the Federal Cigarette Tax Rate?

As of 2010, the federal cigarette tax rate is $1.01 per pack. President Obama signed a 62-cent increase into law on February 4, 2009. In addition to the federal cigarette tax, states also charge taxes on cigarettes.

Purpose

• Cigarette taxes raise the price of cigarettes, which reduces consumer demand. Since smoking is harmful to people's health, reducing the number of smokers benefits society. This type of tax is sometimes called a "sin tax" or Pigovian tax (named after economist Arthur Pigou). In addition, taxes raise revenue, which can then be invested in health care or smoking-prevention programs.

Effects

• According to the Campaign for Tobacco-Free Kids, the 2009 increase in the federal cigarette tax rate will prevent approximately 248,000 smoking-affected births over the next five years and will also save $44.5 billion in long-term heath care costs.

Criticism

• Opponents of increasing the federal cigarette tax rate contend that cigarette taxes disproportionately harm the poor, since lower-income families spend more on tobacco. In addition, some people believe that citizens should be free to engage in activities that harm their own health, as long as others are not affected.

Smoking and Health

• Nearly one of every five deaths in the United States is caused by smoking cigarettes. According to the Centers for Disease Control and Prevention, smoking drastically increases your risk of developing cancer, coronary heart disease and stroke. In addition, smoking increases the risk of infertility, low birth weight and Sudden Infant Death Syndrome (SIDS).