Tobacco Tax

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DEFINITION of 'Tobacco Tax'

A tax imposed on cigarettes to help pay for healthcare for the state's poor and contribute to cancer research and smoking prevention and cessation programs. The idea behind the tobacco tax is to try and prevent more children from becoming smokers and persuade adult smokers to quit.


Also referred to as "cigarette tax".

INVESTOPEDIA EXPLAINS 'Tobacco Tax'

Between 2002 and 2010, 47 states, Washington, D.C., and several U.S. territories have increased their cigarette tax rates more than 100 times.


Each state has different prices due to varying state tax rates in addition to different manufacturer, wholesaler, and retailer pricing and discounting practices. More states have tried increasing rates in an effort to decrease the number of teenagers who start smoking and to minimize the illnesses related to smoking and second-hand smoke.

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