"It's averaging 8 or 9 dollars a pack now," says Caleb McAnelly-Kumle, a manager at The Smoke Island in Truckee. He says he's had to explain to several customers why the price of a pack of cigarettes suddenly skyrocketed as of April 1.
"They'll come in and be like, 'It's so expensive!'" says McAnelly-Kumle. But he says they still fork over the cash.
"They still do it. People like cigarettes, you know," he says.
He has heard from several smokers that they plan to take their business to Nevada. It's something Rachel Ohnstad, a smoker in Truckee, can understand.
"It's a lot cheaper!" says Ohnstad.
"I'd probably go to Reno," agrees Deana Wilson, another Truckee smoker.
That's not surprising to the folks at the Gold Ranch Casino in Verdi, which sells tobacco products at its convenience store. The average cost for a pack of cigarettes there is around $6.50.
"We anticipated an increase in business so we ordered some extra cigarettes to make sure we have a good supply on hand for people," says Tom MacIntosh, General Manager of Gold Ranch.
California voters approved the $2 per pack cigarette tax hike in November. One of the goals was to encourage smokers to quit. But some smokers say it's going to take a lot more than higher costs.
"People don't change that much," says Mike Walker, a smoker from Sparks. "They just go where it's cheaper."
It may even encourage some smokers to get their tobacco from a different product. Caleb McAnelly-Kumle, manager of The Smoke Shop, believes the higher tax may prompt some smokers to use chewing tobacco instead.
"It will still be cheaper than a pack of cigarettes and I feel like more people will turn to that alternative," he says.
McAnelly-Kumle says the tax on chewing tobacco and other tobacco products will go up later in the year.
According to the Campaign for Tobacco-Free Kids, the last time Nevada raised its cigarette tax was in 2015. It went up $1.00, bringing the total cigarette tax in Nevada to $1.80.
- Excessive tax rates on cigarettes approach de facto prohibition in some states, inducing black and gray market movement of tobacco products into high-tax states from low-tax states or foreign sources.
- New York has the highest inbound smuggling activity, with an estimated 56.8 percent of cigarettes consumed in the state deriving from smuggled sources in 2015. New York is followed by Arizona (44.8 percent of consumption smuggled), Washington (43.7 percent), New Mexico (41.4 percent), and Minnesota (35.9 percent).
- New Hampshire has the highest level of outbound smuggling at 71.9 percent of consumption, likely due to its relatively low tax rates and proximity to high-tax states in the northeastern United States. Following New Hampshire is Idaho (22.5 percent outbound smuggling), Virginia (20.7 percent), Delaware (20.3 percent), and West Virginia (18.4 percent).
- Vermont, following a cigarette tax increase from $2.62 to $2.75 in midyear 2014, has seen a decrease in how much is smuggled out of the state from 10.4 percent to 5.5 percent of consumption.
- Cigarette tax rates increased in 31 states and the District of Columbia between 2006 and 2015.
Public policies often have unintended consequences that outweigh their benefits. One consequence of high state cigarette tax rates has been increased smuggling as people procure discounted packs from low-tax states to sell in high-tax states. Growing cigarette tax differentials have made cigarette smuggling both a national problem and in some cases, a lucrative criminal enterprise.
Each year, scholars at the Mackinac Center for Public Policy, a Michigan think tank, use a statistical analysis of available data to estimate smuggling rates for each state. Their most recent report uses 2015 data and finds that smuggling rates generally rise in states after they adopt cigarette tax increases. Smuggling rates have dropped in some states, often, however, where neighboring states have higher cigarette tax rates. Table 1 shows the data for each state, comparing 2015 and 2006 smuggling rates and tax changes.
New York is the highest net importer of smuggled cigarettes, totaling 56.8 percent of total cigarette consumption in the state. New York also has the highest state cigarette tax ($4.35 per pack), not counting the additional local New York City cigarette tax ($1.50 per pack). Smuggling in New York has risen sharply since 2006 (+59 percent), as has the tax rate (+190 percent).
Vermont was a net importer in 2006 (4.5 percent inbound smuggling). But after only modest tax increases from 2006 to 2014 (+46 percent), the state flipped to a net exporter by 2014 (10.4 percent outbound smuggling). However, after raising its cigarette tax by 13 cents in 2015, Vermont’s rate of smuggling cigarettes into other states dropped by almost half (47 percent).
Other peer-reviewed studies provide support for these findings. Recently, a study in Tobacco Control examined littered packs of cigarettes in five Northeast cities, finding that 58.7 percent of packs did not have proper local stamps. The authors estimated 30.5 to 42.1 percent of packs were trafficked.
The study’s authors, LaFaive and Nesbit, note that smuggling comes in different forms: “casual” smuggling, where smaller quantities of cigarettes are purchased in one area and then transported for personal consumption, and “commercial” smuggling, which is large-scale criminal activity that can involve counterfeit state tax stamps, counterfeit versions of legitimate brands, hijacked trucks, or officials turning a blind eye.
The Mackinac Center has cited numerous examples over the many editions of this report, including stories of a Maryland police officer running illicit cigarettes while on duty, a Virginia man hiring a contract killer over a cigarette smuggling dispute, and prison guards caught smuggling cigarettes into prisons.
Policy responses in recent years have included banning common carrier delivery of cigarettes, greater law enforcement activity on interstate roads, differential tax rates near low-tax jurisdictions, and cracking down on tribal reservations that sell tax-free cigarettes. However, the underlying problem remains: high cigarette taxes amount to a “price prohibition” of the product in many U.S. states.
|State||2015 Tax Rate (per pack)||2015 Consumption Smuggled (positive is inflow, negative is outflow)||2006 Consumption Smuggled (positive is inflow, negative is outflow)||2015 Smuggling Ranking (1 is most smuggling, 50 least)||Smuggling Rank Change Since 2006 (e.g., NY changed from #5 to #1, so rank changed +4)||Cigarette Tax Rate Change, 2006-2015|
|District of Columbia||$2.90||N/A||N/A||N/A||N/A||+190%|
|North Dakota||$0.44||-14.6%||+3.0%||38||-6||No Change|
|West Virginia||$0.55||-18.4%||-8.4%||43||-1||No Change|
 See, e.g., Michael D. LaFaive, Todd Nesbit, and Scott Drenkard, “Cigarette Taxes & Smuggling (2015 data),” Mackinac Center for Public Policy, 2017, https://www.mackinac.org/smokes; Michael D. LaFaive, Todd Nesbit, and Scott Drenkard, “Cigarette Taxes and Smuggling: A 2016 Update,” Mackinac Center for Public Policy, Dec. 19, 2016, https://www.mackinac.org/s2016-09; Michael D. LaFaive, Todd Nesbit, and Scott Drenkard, “Cigarette Smugglers Still Love New York and Michigan, but Illinois Closing In,” Mackinac Center for Public Policy, Jan. 14, 2015, http://www.mackinac.org/20900; Michael D. LaFaive, and Todd Nesbit, “Cigarette Smuggling Still Rampant in Michigan, Nation,” Mackinac Center for Public Policy, Feb. 17, 2014, http://www.mackinac.org/19725; Michael D. LaFaive, and Todd Nesbit, “Higher Cigarette Taxes Create Lucrative, Dangerous Black Market,” Mackinac Center for Public Policy, Jan. 8, 2013, http://www.mackinac.org/18128; Michael D. LaFaive and Todd Nesbit, “Cigarette Taxes and Smuggling 2010: An Update of Earlier Research,” Mackinac Center for Public Policy, Dec. 17, 2010, http://www.mackinac.org/14210; Michael D. LaFaive, Patrick Fleenor, and Todd Nesbit, “Cigarette Taxes and Smuggling: A Statistical Analysis and Historical Review,” Mackinac Center for Public Policy7, Dec. 2, 2008, http://www.mackinac.org/10005.
 See, e.g., Michael F. Lovenheim, “How Far to the Border?: The Extent and Impact of Cross-Border Casual Cigarette Smuggling,” National Tax Journal, Vol. LXI, no. 1, March 2008, https://www.ntanet.org/NTJ/61/1/ntj-v61n01p7-33-how-far-border-extent.pdf?v=%CE%B1&r=04833355782549953; R. Morris Coats, “A Note on Estimating Cross-Border Effects of State Cigarette Taxes,” National Tax Journal, Vol. 48, no. 4, December 1995, 573-84, https://www.ntanet.org/NTJ/48/4/ntj-v48n04p573-84-note-estimating-cross-border.pdf?v=%CE%B1&r=46492996768229045; Mark Stehr, “Cigarette tax avoidance and evasion,” Journal of Health Economics, Vol. 24, no. 2, March 2005, 277-97, http://www.sciencedirect.com/science/article/pii/S0167629604001225.
 Kevin C. Davis et. al., “Cigarette trafficking in five northeastern US cities,” Tobacco Control, Dec. 11, 2013, http://tobaccocontrol.bmj.com/content/early/2013/12/11/tobaccocontrol-2013-051244.
 See, e.g., Scott Drenkard, “Tobacco Taxation and Unintended Consequences: U.S. Senate Hearing on Tobacco Taxes Owed, Avoided, and Evaded,” Tax Foundation, July 29, 2014, http://taxfoundation.org/article/tobacco-taxation-and-unintended-consequences-us-senate-hearing-tobacco-taxes-owed-avoided-and-evaded.
 See, e.g., Curtis S. Dubay, “UPS Decision Unlikely to Stop Cigarette Smuggling,” Tax Foundation, Oct. 25, 2005, http://taxfoundation.org/blog/ups-decision-unlikely-stop-cigarette-smuggling.
 See, e.g., Gary Fields, “States Go to War on Cigarette Smuggling,” The Wall Street Journal, July 20, 2009, http://www.wsj.com/articles/SB124804682785163691.
 See, e.g., Mark Robyn, “Border Zone Cigarette Taxation: Arkansas’s Novel Solution to the Border Shopping Problem,” Tax Foundation, April 9, 2009, http://taxfoundation.org/article/border-zone-cigarette-taxation-arkansass-novel-solution-border-shopping-problem.
 See, e.g., Joseph Bishop-Henchman, “New York Governor Signs Law to Tax Cigarettes Sold on Tribal Lands,” Tax Foundation, Dec. 16, 2008, http://taxfoundation.org/blog/new-york-governor-signs-law-tax-cigarettes-sold-tribal-lands.
 See Patrick Fleenor, “Tax Differentials on the Interstate Smuggling and Cross-Border Sales of Cigarettes in the United States,” Tax Foundation, Oct. 1, 1996, http://taxfoundation.org/article/tax-differentials-interstate-smuggling-and-cross-border-sales-cigarettes-united-states.
Banner image attribution: Adobe Stock, Peter Franz
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The Nevada Independent
Every year, an estimated 4,100 Nevadans die prematurely as a result of smoking, and 41,000 children alive today in Nevada are expected to die early from it.
Lawmakers who more than doubled the per-pack cigarette tax in 2015 and approved a 30 percent tax on vaping products this session have said they want to price people out of the habit to prevent some of those deaths, and avert some of the more than $1 billion in annual costs in Nevada directly attributed to lighting up. They also want to curb a trend they said they were “horrified” to discover just a few years ago — while years of work has pushed the youth cigarette use rate below 7 percent, nearly 16 percent of youth are vaping.
“E-cigarettes are winning now,” said Maria Azzarelli, manager of the office of chronic disease prevention at the Southern Nevada Health District and an architect of the Nevada Tobacco Control Plan. “We’re reverting back almost 20 years in terms of the rates of use of those products. That has been quite frightening.”
But exactly how effective have large tax hikes been at getting people to kick the habit? And will a new tax on vaping have the desired effect of keeping youth from getting hooked on something that, while thought to be not as dangerous as combustible cigarettes, still carries health risks?
The limited data since the most recent doubling of cigarette taxes shows the smoking rate wobbling at or slightly below what it was before the increase. But state budget analysts are banking on a continued drop in cigarette sales, predicting the per-capita pack sales in fiscal year 2021 to be one-fifth of what that rate was in 1991.
The effect of a new tax on vaping products — which has not previously been taxed — is a bit more uncertain, and fiscal analysts haven’t yet altered their budget forecasts to reflect a potential tax-driven slowdown in the “other tobacco products” category, where the revenue will flow. The state has been struggling to even get a sense of how many teens are vaping, with surveys only offering a picture of recent developments and rapidly shifting terminology (from e-cigarettes to vaping to JUULing) making it difficult to design questionnaires that will capture accurate responses.
“It’ll be very interesting to watch this unfold. It’s just going to take a while to get year over year [data],” said Russell Guindon, head of the Legislative Counsel Bureau’s Fiscal Analysis Division, about the impact of such a significant tax on behavior.
At Knuckle Dusters Vape Shop in Reno earlier this month, owner Richard Price stood in front of a wall lined with hundreds of small and colorful e-liquid bottles. He predicted the new tax will have something of a catastrophic effect on the rapidly growing industry surrounding vaping, which has only been around for about a decade.
But he’s less confident that the state’s approach on the taxation will make the kind of splash on youth vaping that proponents say they so desire. If lawmakers’ real concern is youth getting hooked, they should focus on raising the minimum smoking age and doing more undercover operations, he said.
“If you're going to push a bill to try to keep kids away from it then enforce the laws that are already there,” he said. “I've been here for four years and never had a compliance check done.”
Reversing some successes
In the last two decades, Nevada has seen a big dropoff in its adult smoking rate, which fell from 30.3 percent in 1998 to 16.5 percent in 2016.
“In the state of Nevada we had the highest smoking rates in the nation,” Azzarelli said. “We’ve made great strides with our awareness campaigns and our policies.”
Some of the progress can be chalked up to the Master Settlement Agreement, a $200 billion settlement between large tobacco companies and 46 states to help compensate them for tobacco-driven health problems. Nevada’s youth smoking rate, which was ranked highest in the country in 2001, fell to 29th by 2010 after nearly a decade of settlement-linked prevention activities.
But many states, including Nevada, have reinvested very little money from tax hikes and the settlement into tobacco prevention and cessation activities. While the state at one point was sending $4 million to $4.5 million a year to the cause, it zeroed out that spending during the recession and has only restored about $1 million a year.
The Centers for Disease Control and Prevention recommends that based on Nevada’s size, $30 million be spent a year on those efforts. That means the state is spending just 3 percent of what the CDC recommended to curb smoking.
Nationwide, only 2.6 percent of the $425 billion states received from tobacco taxes and the settlement over the past two decades was reapplied to anti-tobacco efforts. The approximately $160 million Nevada brings in every year from cigarette taxes flows to the general fund, where it supports everything from K-12 education to mental health services.
Almost all of the approximately $40 million the state receives each year from the Master Settlement Agreement flows to programs unrelated to tobacco use prevention. Forty percent of funds go to the state’s popular, merit-based Millennium Scholarship, while sixty percent go to the Fund for a Healthy Nevada.
Grantees for the 2018-2019 fiscal year included several food banks, respite care programs, services that offer transportation for seniors and people with disabilities and life skills training to promote independent living.
“That is one of the dynamics that makes it challenging,” said Michael Hackett, a lobbyist for smoking prevention groups. “We don’t like that we’re competing with them but unfortunately that’s how things have been.”
While Nevada funnels money from a settlement with tobacco companies to other causes, the state now ranks 38th in the country for spending on tobacco prevention activities. The less than $1 million the state is spending each year to fight tobacco use is up against an estimated $64 million in tobacco marketing in the state.
Advocates are hopeful about SB263, the vaping tax bill passed this session that is expected to yield $8 million in tax revenue each year. It requires $2.5 million each year goes toward tobacco prevention activities.
“Of course the prevention funding to create awareness was absolutely just wonderful,” Azzarelli said.
A new front: vaping
As Nevada celebrated the decline in its youth smoking rate, public health officials have been alarmed at the rapid rise of vaping: while 6.7 percent of youth say they’ve used a cigarette at least once in the past month, 15.5 percent said they’d vaped in the previous 30 days.
That puts Nevada above the national average of 13.2 percent.
“We have to get our hands around this e-cigarette issue. We’re woefully underfunded in this regard,” Azzarelli said.
Part of the issue is the mixed messaging around vaping. Price says he used vaping as a way to kick his pack-a-day cigarette habit and was successfully able to step down to very low levels of nicotine; he opened a vape shop because he believes in the power of his products, and he helps customers addicted to cigarettes choose e-liquids in progressively lower concentrations to eventually phase off nicotine altogether.
“When somebody finally gets on a zero, they buy a couple of bottles, we never see them again,” Price said. “It’s not great for business, but that’s what we’re here to do. That’s what we believe in.”
But he acknowledges that it’s possible for people who don’t smoke at all to pick up a nicotine addiction through vaping. While older products stick to nicotine concentrations of 3 to 6 mg of nicotine per milliliter, newer products on the market, such as the JUUL, use concentrations of sometimes 50 or 60 mg.
The high-nicotine products, which have lately been enriched with benzoic acid that ensure they absorb in the bloodstream faster, don’t taste as good but produce a quicker, more addictive high. The small devices like the JUUL are also discreet enough for students to use in class without a teacher noticing.
“These high nicotine devices, they don't create hardly any vapors, so it's really stealthy,” Price said. “You can just hit it and hold it in until it disappears and no, you're not gonna smell it. You're not gonna see it.”
While some studies show that e-cigarettes are less harmful than combustible cigarettes, others point out the adverse affects the smoke and chemicals in e-liquids can have on the lungs and cardiovascular system.
The CDC sums up the relative benefit of vaping on its website: “E-cigarettes have the potential to benefit adult smokers who are not pregnant if used as a complete substitute for regular cigarettes and other smoked tobacco products. E-cigarettes are not safe for youth, young adults, pregnant women, or adults who do not currently use tobacco products.”
Aside from the challenges of trying to curb a behavior seen as less harmful than traditional smoking, public health advocates are also reckoning with the overall renormalization of smoking — including not just vaping but the enthusiasm and acceptance over a legal marijuana industry that is becoming a notable source of tax revenue.
“Now there’s a lot of advertisement for cannabis products. Maybe there was a generation that they weren’t exposed to that,” Azzarelli said. “It’s becoming normalized to talk about using marijuana. It’s becoming more popular to talk about. When it’s legalized people feel more inclined to do that. The act of smoking or vaping anything has been re-normalized.”
The Nevada Tobacco Prevention Coalition has been charged with maintaining a laser focus on tobacco rather than venture into areas such as marijuana, but their position is that no smoke is good smoke. Even marijuana is an oily plant that can lead to the buildup of tar in the lungs, Azzarelli said.
Health officials are also looking forward to the inclusion of vaping in the Clean Indoor Air Act’s ban on indoor smoking. Keeping smoking and vaping out of sight could address the normalization issue but also prevent secondhand exposure to chemicals in e-liquids.
“We look forward to ... the fact that e-cigarettes will not not be allowed to be used indoors, so people will be protected from the secondhand aerosols coming off those products and that’s a huge, huge deal,” Azzarelli said.
How has cigarette consumption responded to the tax increase?
Taxing cigarettes high enough that they become out of reach for consumers has long been a goal for anti-smoking advocates, and it doesn’t hurt in the legislative process that some of the extra revenue can help balance budgets. The American Lung Association says that every 10 percent increase in the price of cigarettes reduces youth consumption by about 7 percent, and adult consumption by about 4 percent.
“Pricing, and particularly taxation, is the best practice in terms of determining usage,” Hackett said.
In 2015, Gov. Brian Sandoval was proposing a 40-cent-per-pack cigarette tax increase, but anti-smoking advocates pushed for a higher rate.
“From a public health [perspective], it would have a very nominal effect. We were hoping to do something that would have public health benefit,” said Hackett.
Lawmakers ultimately passed a $1 tax hike, something that the governor and legislative leadership said they could handle because it wasn’t too far out of line from what other western states are doing.
So has it worked?
Nevada’s adult cigarette smoking rate dipped from 17.5 to 16.5 percent in 2016, but then ticked back up to 17.6 percent in 2017, according to the Centers for Disease Control and Prevention. Figures for 2018 have not yet been released.
“We’re not sure what happened there but overall the surgeon general shows that when you increase the price of cigarettes, consumption goes down,” Azzarelli said.
State fiscal analysts have also seen some aberrations, including a spike in the raw number of packs sold in fiscal year 2015, a big drop in fiscal year 2016 and some stabilization after that.
The big jump is likely because wholesalers who recognized the per-pack tax was jumping up bought as many stamps as they could at the lower rate before the higher rate kicked in July 1, 2015. (The cigarette tax is paid by a wholesaler, who buys a stamp that is affixed to a pack and indicates the tax was paid. Taxation happens at the point the wholesaler pays it, rather than at the cash register when a customer buys a pack.)
Trends are just now starting to normalize after those changes. State fiscal analysts are still going with the theory that higher prices will reduce smoking, and have predicted year-over-year declines in per-capita pack purchases.
But the story of the tax’s impact has other nuances. Although it’s hard to prove because people don’t provide their address when buying cigarettes, purchasing habits could be influenced by major changes in cigarette tax rates in other states (such as California’s $2 per pack tax hike) and people near the border buying their cigarettes in a cheaper state.
With more than 40 million visitors a year, it can be difficult to tell how much tourists are driving sales trends in Nevada.
And cigarette sales also appear highly responsive to the recession. Experts believe that’s because people with a less serious nicotine addiction cut back on their consumption when money is tight.
“Probably people would think of cigarette smoking as being somewhat inelastic demand,” Guindon said. “I think the Great Recession was going to change things on the margins.”
Effect on the vaping industry
Recognizing that consumers are moving from smoking to vaping, lawmakers tried in 2017 to impose a tax based on the volume of vaping liquid. The bill died amid an outcry from vaping product manufacturers who argued the tax would crush them after they had recently fled from a California vaping tax.
Nevada lawmakers got their vaping tax in 2019, in the form of a 30 percent tax on the wholesale cost of all vaping products — both vaporizers and e-cigarette liquid.
Price is concerned because the tax, which kicks in Jan. 1, 2020, makes no distinction on nicotine content. He believes that structure will incentivize shops to sell high-margin, highly concentrated products instead of stocking less-popular, lower-nicotine e-liquids that help wean people off of smoking but that are sometimes a losing business proposition.
“Shops like this that are responsible, that want people to quit smoking are going to be the ones affected by it because you can just go into a head shop,” he said. “You say, ‘hey, I want that bottle with tons of nicotine in it’ and they're just going to be like ‘okay,’ sell it and you're on your way. So the educational shops, I think, are going to be the ones that are hurt.”
The tax will also acutely affect vaporizers, which are more expensive and would not only be subject to the 30 percent tax but a 25 percent tariff imposed as part of a trade war with China (most vaporizers are made overseas). That combination would make it much cheaper to buy the product online.
Price said he met before the tax passed with legislators, who shared the data about a fraction of youth giving up vapor products for every 10 percent hike in price. He thinks a better strategy is doing more compliance checks and taxing vape shops $1,000 per quarter per employee to perform them, but the suggestion didn’t make it into the bill.
He says some vape shops in the state are already talking about closing at the end of the year, but he’s hoping to absorb much of the tax increase to spare his customers and ride out the change.
“It's booming for us,” Price said. “We do very well that and that's why I think while this tax is going to hurt, it's going to really, really hurt, and I'm going to have to change my model in some ways, we're going to make it through it.”
Nevada Has Nation’s 17th Highest Cigarette Tax, Up From 34th
Posted on by jrestrepo & filed under Nevada by the Numbers Blog.
A recent review by the Tax Foundation found that Nevada’s $1.80 excise tax on a pack of 20 cigarettes puts the state 17th in a nationwide ranking of rates. This is a substantial jump from January 2015, when the state was in 34th place with a cigarette tax of 80 cents, and comes on top of a federal tax of $1.0066 per pack.
As part of a variety of tax and fee increases approved during the 2015 Nevada Legislature, the cigarette tax was raised by a dollar, the highest jump in the state’s history and the first since a 2003 increase of 45 cents. Nevada’s cigarette tax revenue goes into the general fund, where the extra funds will likely help cover investments in new education initiatives. However, the Tax Foundation warns against using cigarette taxes to fund year-over-year spending because they’re unstable. Specifically, look at the precipitous decline in tobacco use since the 1960’s:
Source: David M. Burns et. al, Cigarette Smoking Behavior in the United States, in Smoking and Tobacco Control Monograph No. 8.
The new cigarette tax in Nevada will likely contribute to this continued decline. A 2011 World Health Organization study found that a 10 percent increase in tobacco prices from taxation can reduce consumption by 4 percent in high-income nations.
Another unintended consequence of divergent state tax rates is cigarette smuggling. Previously, Nevada was 9th for smuggler outflow, with cigarettes heading into high-tax neighbors Utah and Arizona. Now that Nevada’s rate sits between those two states, it’s likely that the dynamic will shift and cheapertobacco will begin coming in from California and Idaho.
A quick breakdown of the rankings and rates of other Nevada’s neighbors in the Mountain West:
- California took Nevada’s former 34th place spot at $0.87
- Utah was bumped down to 19th with a rate of $1.70
- Arizona holds the 11th highest state tax at $2.00
- Colorado comes in at 36th place with a rate of $.84
Click here to find the full set of cigarette tax research and resources from the Tax Foundation.
2015 nevada cigarette prices
State’s largest-ever cigarette tax hike burns smokers
Some customers at Star Liquor on East Prater Way in Sparks were quick to complain Wednesday when their cigarettes cost about $1 more than they did Tuesday.
Wednesday — July 1 — was the first day the Nevada Legislature’s new law that raises cigarette taxes by $1 per pack went into effect.
The $1 per pack tax hike is the largest single cigarette-tax hike in the history of Nevada, said Steve Moran, director of business enterprise and economic development for the Reno-Sparks Indian Colony.
“We’ve had customers complain,” said Delmi Arevalo, a Star Liquor clerk. “But they said we know it’s not you, it’s the government adding a dollar for a pack.”
The new tax raises Nevada’s cigarette tax from 80 cents to $1.80 a pack and takes the price of an average pack of smokes in Nevada from about $5 to $6 dollars, said Kelli Goatley-Seals, Washoe County’s health education coordinator of the Chronic Disease Prevention Program.
The cigarette tax hike is the first state hike on cigarettes since 2003, when the tax was boosted by 45-cents per pack.
It is expected to raise an additional $192 million for the state in next two-year budget cycle. The tax increase on smokes was part of the overall $1.3 billion plan of new and extended taxes that state lawmakers approved after it had been proposed by Gov. Brian Sandoval.
Arevalo said Star Liquor’s cigarette sales are good, even after the tax hike.
“When people are smoking or drinking, they don’t care how much it costs. They will still buy it,” Alevalo said. “Even if they don’t have anything in the refrigerator to eat, they will still buy it.”
Yet statistics predict a decline, said Moran.
The hike in prices due to the new tax will impact 412,900 Nevada adults and 14,500 Nevada teen-agers who currently smoke cigarettes, according to data from the Campaign for Tobacco-Free Kids.
“If the price goes up 10 percent, consumption goes down 4 percent,” said Moran, whose Reno-Sparks Indian Colony is a major player in retail tobacco sales in Washoe County. “That is pretty much common knowledge in the industry.
“I think it (cigarette use) will decline, it will decline substantially,” Moran said. “This is a substantial increase (in taxes).”
Others in the business of selling tobacco products agree.
“A lot of people do quit,” said Rod Friesen, manager of the Tinder Box, a Reno tobacco shop that his been in business since 1928. “I see it every time they raise taxes. There are people who will quit, or switch to a different form, like e-cigarettes.”
The biggest hope is that the price hike will curb smoking among teenagers, said Goatley-Seals.
Every 10-percent increase in cigarette prices reduces youth smoking by about 7 percent, according to the Campaign for Tobacco-Free Kids.
“Most of the people who smoke are going to start by the time they are 18 years old,” she said. “So being able to stop people from smoking as youths is significant.
“So with the higher tax rate -- and the increased price for a pack of cigarettes -- the sheer financial aspect are going to keep some youths from smoking,” said Goatley-Seals. “It is an incentive for people to quit smoking when you raise taxes and it is also effective as a deterrent for people to start smoking, especially youths.”
All of the new funding from the tax increase is destined for the state’s projected $7.4 billion general fund, according to Department of Taxation documents.
However, the current portion of cigarette taxes that go to county and local governments through the consolidated tax, will remain the same, said state officials.
Much of the new cigarette taxes could go to education funding, since Sandoval’s budget includes $1.3 billion in new and extended taxes that will help fund programs for early childhood education, expansion of full-day kindergarten, programs to ensure that Nevada students can read by the third grade and other k-12 and higher education programs.
The state tax increase on cigarettes will also be a windfall profit for tribal governments in Nevada — like the Reno-Sparks Indian Colony — that engage is tobacco sales on tribal land to non-tribal customers.
Tribal smoke shops are also required to increase taxes to the level the state imposes, according to state law. Smokers who think they can avoid paying the new tax by purchasing cigarettes from tribal shops are in for a surprise.
“Essentially, if people are going to try to get a big bargain by going to an Indian smoke shop, it is not the bargain that they would expect,” said former state Sen. Ernie Adler, who lobbies for the Pyramid Lake Paiute Tribe at the Legislature. “Their prices are going to go up, too.”
Reno-Sparks Indian Colony officials have made no public predictions on how much revenue the new cigarette tax will produce for them, Moran said. Yet he mentioned the Reno Sparks Tribal Health Center as an example of where the windfall funding could be applied.
The tribal government, however, also has funding needs for court services, early childhood education and public works.
“The services we provide are provided to all Native Americans in Washoe County,” Moran said. “You don’t have to be a tribal member of the Reno-Sparks Indian Colony.
“We’ll use it (tax money from cigarettes) for essential government services, just like other government do,” Moran said. “And the end result will be better service for tribal members and Native Americans in Washoe County. There will be less indigent care (needed to be) provided by the hospitals.”
Now, the only western states with a higher cigarette tax than Nevada are Arizona ($2 per pack) and Washington ($3.025), according to statistics from the Campaign for Tobacco-Free Kids. The average state cigarette tax is $1.60 per pack.
View CommentsSours: https://www.rgj.com/story/news/politics/2015/07/03/states-largest-ever-cigarette-tax-hike-burns-smokers/29685251/
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