Gas, sales and cigarette taxes are higher

August 15, 2010

If you drive a car, have a nicotine habit or buy things, you're probably paying more this year.

The tax services company CCH conducts an annual survey of state consumption taxes and the 2010 data indicates that many cash-strapped states are hiking sales, gas and cigarette taxes.

"From the
increases in consumer taxes, it's evident that many states are trying to
shore up revenue shortfalls," said Daniel
Schibley, CCH senior state tax analyst. "Many other states have not yet increased taxes, but may
do so."

CCH found that as of July 1, five states increased their gas taxes, five hiked state sales taxes and 11 bumped up their taxes on cigarettes.

The District of Columbia also increased its
taxes across all three consumer tax categories, joining North Carolina,
which is the only state to also hike taxes in all three areas.

Just one state, Florida, reported a tax reduction. But don't get too excited Sunshine State residents. The state's gas tax went from
16.1 cents to 16 cents per gallon. While every tax penny, or portion thereof, saved helps, this fractional cut of gas taxes won't get you much farther down I-95.

And as the CCH map below (click the image or here for a larger view) shows, the rates in each consumer tax category vary widely across the country.

State Gasoline, Sales and Cigarette Tax Rates

Consumer-tax-rates-2010-cch (2)

The three figures for each state are, left to right, (1) the basic state
gasoline tax rate per gallon, exclusive of sales tax, various environmental taxes and fees,
local taxes, and license and inspection fees;
(2) the state sales tax rate ("0%" indicates that state-level sales tax
is not levied), including a 1 percent statewide local rate in California
and Virginia; and (3) the state cigarette tax rate per pack of 20.
Local taxes may apply in certain jurisdictions, but are not reflected.
Any rate changes effective July 1, 2010, but not announced by press time
are not reflected.

Gas prices down, but gas taxes up: The price at the pump has headed
downward in the past few months, but gas taxes have gone up in five states: California, Kentucky, Minnesota, Nebraska and
North Dakota, as well as the District of Columbia.

In some states, the rate hike was negligible, as in Minnesota where the levy went from 27.1 cents to
27.5 cents per gallon.

Golden State drivers, however, weren't so lucky. California's gas tax over the past year has nearly doubled, going from 18 cents to 35.3 cents per gallon.

Sales taxes at all levels rise: Sales
taxes are major revenue sources for the states that have them, and are
often an important funding source for cities and counties, as well.

Over the past year, CCH found five states
increased their sales tax rate: Arizona, Kansas, Massachusetts, New
Mexico and North Carolina. Washington, D.C., also hiked its
sales tax.

Sales tax increases over the past year ranged from incremental in states like New
Mexico, which went from 5 percent to 5.125 percent, to Massachusetts' "what the…" jump from 5 percent to 6.25 percent. No wonder Bay Staters pushed for a tax holiday!

In all, 26
states and the District of Columbia now impose a sales tax of 6 percent
or more.

And remember, in many places the state levy is just part of the purchase price. Counties, cities and other local jurisdictions add their own sales taxes on top of the state sales tax.

For example, Colorado's statewide 2.9 percent sales tax rate becomes 8.4 percent in Steamboat Springs and 8.9 percent in Winter Park. In Kansas City, sales taxes can go as high as 9.925 percent in the city's special taxing districts.

But the nation's top big-city sales tax (dis)honors are shared by Chicago and Los Angeles, which each impose a 9.75 percent
combined rate on shoppers.

Young woman smoking

Cigarette taxes continue to climb: Like the smoke from a nicotine stick, cigarette taxes wafted upward over the last year.

CCH found that 10 states added to their cigarette taxes: Connecticut, Delaware, Hawaii, New Mexico, New York, North Carolina, Pennsylvania, South Carolina, Washington and Wisconsin. The District of Columbia also
increased its tax.

One of the biggest percentage increases came from traditional tobacco country. South Carolina's cigarette taxes went from 7 cents per pack, the lowest in the nation, to 57 cents.

But the highest state cigarette tax is in New York, where the tax is
now $4.35 per pack, up from $2.75 last year.

Four other states raised everyone's favorite sin tax to $3 or more per pack over the past year: Connecticut, Hawaii, Rhode Island and Washington.

And as with sales taxes, notes CCH, statewide rates might not be the end of the story. An increasing number of cities and
counties, as well as the federal government, impose additional taxes on
tobacco products.

That's the case in New York City. While the higher state cigarette tax means the average price of a pack now is $9.20, the Big Apple's separate cigarette tax pushes the price of a pack bought within the city to around $11.

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Comments
  • Cigarette taxes a re a funny thing.. Are they aimed at making smokers quit or at increasing tax revenue… I mean if less smokers smoke then less smokers buy cigarettes so less tax revenue. Silly? Anyway I use an e-cig now… Much better and affordable. The one brand I like has more info on e-cigs in general on their website http://thevapormaster.com

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