Study Used to Fight Proposed Cigarette Tax

Michigan’s cigarette tax of $2 a pack could grow by another 25 cents, and c-stores are fighting the proposal with a new study, the Detroit Free Press reported.

Gov. Jennifer Granholm has proposed the tax. But a recent study conducted by three economists shows the proposal would result in minimal revenue and more smuggling from other states with lower cigarette taxes.

The report was commissioned by a lobby group for gas station convenience stores and found that the 25-cent tax cigarette tax hike, a 12.5% increase, would produce only 8.5% more in tobacco tax revenue. Meanwhile, the 25-cent tax increase would cost convenience stores a combined total of $6.5 million, the report noted. Smokers, who buy other things at the stores when they come in for smokes, would buy fewer cigarettes or shop elsewhere, such as in a neighboring state where tobacco taxes are lower.

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