R.I. near top for percentage of revenue from tobacco tax

(Updated, 9:55 p.m.) Rhode Island posted the fourth-highest percentage of tax revenue that came from tobacco taxes in the nation in 2011, according to a map released Monday by the Tax Foundation. More

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R.I. near top for percentage of revenue from tobacco tax

COURTESY TAX FOUNDATION
RHODE ISLAND RANKED 47th for the percentage of tax revenue that came from tobacco taxes in 2011. New Hampshire came in first.
Posted 8/12/13

(Updated, 9:55 p.m.)

WASHINGTON – Rhode Island posted the fourth-highest percentage of tax revenue that came from tobacco taxes in the nation in 2011, according to a map released Monday by the Tax Foundation.

Only two states, New Hampshire and Delaware, collected a greater percentage of their tax revenue from tobacco taxes than the 2.7 percent that Rhode Island recorded (Michigan also had 2.7 percent of its revenue come from tobacco taxes).

At the time of the data analyzed by the Tax Foundation, Rhode Island’s cigarette tax rate was $3.46 per pack, according to cigarette tax increase information compiled by the Federation of Tax Administrators. The tax increased to $3.50 on July 1, 2012.

As of Jan. 1, 2013, Rhode Island had the highest cigarette tax in New England and second highest in the nation, according to the Tax Foundation. Rates stand below $3 in Maine, Massachusetts, New Hampshire and Vermont and at $3.40 in Connecticut. Only New York charges a higher tax, of $4.35 per pack.

New Hampshire brought in the highest percentage of its tax revenue from cigarette taxes in 2011, drawing more than $232 million, or 4.37 percent of its state and local tax revenue from tobacco taxes.

The Tax Foundation analysis noted that New Hampshire’s cigarette tax rate, $1.78 in early 2011 before a drop to the current $1.68 on July 1, 2011, is lower than that of the other New England states. Because of the disparity, the report suggests the high revenue might have come in part from so-called cigarette smuggling, or purchases from residents outside New Hampshire who traveled to take advantage of the lower tax.

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