New Federal Tobacco Tax Means Michigan Smokers Getting Double Taxed

How Michigan Smokers Will Be Affected by a Double Tax on Tobacco

According to the U.S. Department of Treasury, on April 1st of this year the Federal Government will be raising the tax on a pack of cigarettes from 39 cents per pack to $1.01 per pack. Federal taxes on all tobacco products will be rising dramatically as well. Cigars, snuff, pipe tobacco, chewing tobacco, rolling tobacco and all rolling accessories will be taking a serious hit. The primary reason given for raising the federal taxes on tobacco products is for expanding low-income children's health insurance.(SCHIP)

Federal tobacco tax increases:

Large cigar tax will go up to about 40 cents per cigar from a nickel per cigar.
Small cigar tax will go up to a $1 per pack from 4 cents.
Pipe tobacco tax from $1.10 per pound to $2.83 per pound.
Chewing tobacco tax from 19.5 cents to 50.3 cents per pound.
Snuff tax from 53.5 cents to $1.51 per pound.
Loose tobacco tax (roll your own) from $1.10 to $24.78 per pound.

In a recent Detroit News article by Chris Christoff, it was noted that Michigan's Governor Granholm also wants to double the Michigan state tax on all tobacco products. (This is except for the already in place $2 per pack manufactured cigarette tax.) These new taxes are being implemented to help balance next years dismal state budget. Once the Legislature approves this, the tobacco items tax will jump from 32% to 64% on wholesale prices.

In Michigan, the folks that roll their own will be getting hit the hardest. With the combined Federal and state tax, the average price of popular rolling tobacco will go up from about $20 per one pound bag to $70 per bag. This will change the total price for rolling your own quite substantially. The current cost for rolling your own is about $1 per pack when buying a one pound bag of tobacco. Once all the taxes go into effect, the price will jump to about $3 per pack.