1. Case Study in Taxation Cigarette Taxes

2. Estimating US Tax Revenue from Cigarettes Taxes State Utah Maryland California Michigan New York Year 1997 1999 1994 2000 Price increase 92 % 83 % 135 % 200 % 98 % Sales Decline -20.7 % -15.3 % -18.9 % -20.8 % -20.4 % Elasticity -.23 -.18 -.14 -.10 -.21

3. Estimating US Tax Revenue from Cigarettes Taxes State Utah Maryland California Michigan New York Year 1997 1999 1994 2000 Price increase 92 % 83 % 135 % 200 % 98 % Revenue Increase (%) 86 % 53 % 91 % 140 % 57 % Revenue Increase($millions) $22 $68 $555 $341 $365

4. Incidence of Cigarette Taxes Quantity0 Price D S Tax The incidence of the tax falls more heavily on consumers... than on producers. Price without tax Price buyers pay Price sellers receive

5. http://www.tobaccoatlas.org/solutions/tobacco_taxes/excise_tax/ Cigarette Taxes Around the World Tax as Percentage of Price per Pack

6. Cigarette Taxes in the EU Tax as % of price/pack Cigarette tax Ad valorem tax

7. US Smoking Rate, by Income % of adult population < $15,000 $15,000 – $24,999 $25,000 – $34,999 $35,000 – $49,999 > $50,000

9. http://www.rti.org/pubs/8742_excise_taxes_fr_5-03.pdf http://www.budget.ny.gov/pubs/archive/fy1011archive/eBudget1011/fy1011littlebook/Healt hierNY.html http://www.cdc.gov/tobacco/data_statistics/tables/economics/trends/images/tax_price.jpg http://www.gallup.com/poll/117214/cigarette-tax-affect-low-income-americans.aspx http://www.cga.ct.gov/2005/pridata/Studies/CT_Tax_System_Final_Appendix.htm References http://vaperforms.virginia.gov/indicators/healthfamily/smoking.php http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Tax_revenue_statistics