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 Children̵7;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 localities̵7; 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.