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Mortgage & Housing Market News from HSH.com
March 14th, 2009

April Fools comes early for smokers



If you smoke, you probably know that the Federal government is poised to raise the tax on a pack of cigarettes on April 1 by 62 cents, raising Uncle Sam’s take to $1.01 per pack.

But if you were thinking about buying a few cartons ahead of time to beat the tax hike, it’s too late now:

Smokers who were preparing to take a hit to their wallets next month are learning to their surprise that the era of nearly $5-per-pack cigarettes arrived early.

On April 1, the federal government boosts its tax on cigarettes to help pay for a children’s health care program. But many tobacco companies, in anticipation of the extra 62-cent tax, decided to implement price hikes now — about three weeks early.

Tobacco giant Philip Morris, maker of popular brands Marlboro, Virginia Slims and Parliament, upped its list price 71 cents per pack on Monday. R.J. Reynolds, maker of Kool, Camel and several discount brands, plans to raise prices between 41 and 78 cents beginning Monday.

This, in turn, has driven the retail price of most packs of cigarettes up about $1 at many local stores.

Several writers have pointed out that the Federal and state governments are somewhat schizophrenic when it comes to tobacco taxes:

Desperate for an infusion of cash, politicians have turned to their oldest stand-by; cigarette taxes. Even after decades of steady increases in tobacco taxes, state lawmakers in at least a dozen states are looking to raise cigarette taxes.

Right now, government makes more off the sale of a pack of cigarettes than tobacco companies. In some states, two-thirds of the price of a pack already goes to government. This will get worse because Congress just hiked the federal cigarette tax 61 cents a pack to help pay for the expanded State Children’s Health Insurance Program.

(Hat tip: Hot Air)

UPDATE: We’d like to mention that our home state, New Jersey, adds $2.57 in taxes to the price of each pack, and the governor’s proposed budget would hike that to an eye-popping $2.70 per pack, the highest (at the moment) in the country.

If you How much are you smokers out there paying? If you’re not sure, here’s a map of cigarette taxes.

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One Response to “April Fools comes early for smokers”

  1. ganesh sirsat Says: March 16th, 2009 at 4:21 am

    i approtiate with your thinking becouse smoking is injurious to /health

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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