Who Benefits From the Cigarette Excise Tax?

Smoking is a deadly addictive habit. This deadly addiction brings billions of dollars of tax revenue to the federal, state and local government. On an annual basis, the federal government collects $7 billion dollars of excise tax from cigarette sales.

Federal

• One of the beneficiaries of cigarette excise tax is the federal government. The revenue from the tax goes directly to fund the Children’s Health Insurance Program (CHIP), a program that benefits 11 million children whose family cannot afford to insure them.

State

• The latest U.S. Census State and Local revenue data indicated that in 2008, the States amassed $16 billion dollars in taxes from cigarette sales. The cigarette excise tax helps the state to balance its budget; fund its health care programs and various state projects such as transportation improvement projects.

Local

• Various municipalities impose cigarette taxes at the local level. The revenue from the cigarette tax goes into the localities’ general fund for various local projects such as road maintenance and school renovations.

Smokers

• Many state and local government allocate funds for various smoking prevention and cessation programs. By encouraging smokers to stop smoking, this will eventually drive down health care costs.

Youth

• Youth smokers are the biggest beneficiaries of the cigarette excise tax. When the excise tax is imposed; many youths cannot afford the extra cost associated with buying the tobacco product that they want. As a result, the tax imposition helps deter this deadly habit and encourage youths to stop smoking.