President Obama’s proposed Fiscal Year 2015 federal budget includes a 94 cents per pack increase in the federal cigarette tax rate and a proportionate 93% increase in all other tobacco tax rates, the National Association of Tobacco Outlets (NATO) reported.
Each of these tax rates would be annually adjusted upward by an inflation index. The additional cigarette and OTP tax revenue would fund pre-school education programs for four years olds in low-income families.
This proposal mirrors the one President Obama included in his Fiscal Year 2014 budget, which Congress did not pass. The President’s budget has been delivered to Congress for consideration by the U.S. House of Representatives and the U.S. Senate.
Under the 2015 budget proposal, the new tax rates for cigarettes and tobacco products would be as follows:
Cigarettes and Little Cigars: $1.95 per pack
Chewing Tobacco: 97.13 cents per pound
Moist Snuff: $2.91 per pound
Roll Your Own Tobacco: $47.82 per pound
Pipe Tobacco: $5.464 per pound
According to the White House Office of Management and Budget (OMB), the proposed cigarette and tobacco tax increases are estimated to raise $78 billion over the next 10 years.
The budget estimate indicates that the cost of expanding pre-school education to four year olds from low-income families would be $76 billion over this same 10 year time period. However, NATO pointed out that after the first 10 years, the cost of the program exceeds the additional cigarette and tobacco tax revenue to support the program.