Chapter 36 Taxation

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$2.65 is the projected average price of cigarettes sold in the U.S. in 2000; 12.8% of

this is federal tax. In Great Britain, the cost of a pack is $6.25; 80% of this is tax. In

Alaska, there was a 17% drop in cigarette sales after the state tax was increased

from 29 cents to a dollar.

Time, September 13, 1999, p. 25

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Domestic cigarette consumption has fallen 6 to 7% in 1998-1999, double the 3%

average annual decline of the last decade. Analysts attribute the decline to a

nationwide 25% per pack increase in the last year. In some states with high taxes

such as California, Massachusetts, and Alaska, consumption declines from the

previous year could be greater than 15%.

Christian Science Monitor, February 25, 1999, p. 1

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The Federal tax on large cigars is a maximum of 3 cents per cigar.

NEJM, June 10, 1999, p. 1830

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4 million teens spend $2 billion on a billion packs of cigarettes that they consume

each year, paying $222 million in federal and $300 million in state tobacco taxes.

ABC evening news, June 30, 1999

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The tobacco industry spent $29.8 million in an unsuccessful attempt to defeat

California's Proposition 10, which raised the state cigarette tax by 50 cents a pack in

1999. Proponents of the tax spent $9 million, including director Rob Reiner's $1

million. The tobacco industry's position against the tax was supported by TV ads

featuring Wilson Riles, a highly respected former state school superintendent, whom

the industry paid $90,000. The tax passed by only 80,000 votes out 8 million cast.

San Francisco Chronicle, February 4, 1999, p. A1

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Monday, July 24, 2000

Page 15 of 16

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