As of August 1st, 2016 the state of Pennsylvania has joined the list of states that tax
cigarettes and tobacco products. The new cigarette tax in which it taxes a rate of
$2.60 per pack of 20 cigarettes, or $26 per carton of 10 packs. This marks
a $1.00 increase per pack and $10.00 per carton of
cigarettes. Snuff and chew tax increases of 55 cents per ounce went on the books as well.
This increase affects a myriad of merchants that had business near the
state limits. Most of these merchant’s business was from people
of out-of-state, who drove to Pennsylvania in order to save money on cigarette
purchases. Before this cigarette tax, people from New Jersey were saving
a $1.10 per cigarette pack by just making the drive to
However, out-of-state consumers are no longer going to make the drive to
Pennsylvania for a mere 10 cent saving. The businesses near state limits
will not be able to withstand the hit on their business and most of them
would most likely close as they lose out-of-state business due to no longer
having a price advantage.
Along with this cigarette tax, the cost of the retailer was changed from
6 percent to 7 percent. The “Cost of the Retailer” is defined
as the basic cost of cigarettes to the retailer plus the cost of doing
business by the retailer in excess of the basis cost of cigarettes, this
is expressed as a percentage and applied to the basic cost of cigarettes.
With more tax changes coming in October 1st, 2016 on other tobacco products such as a tax increase of 55 cents per
ounce on bagged tobacco.
The cigarette tax marks the largest tax change on the state’s smokers
since Pennsylvania first imposed a cigarette excise tax in 1935. Making
Pennsylvania’s cigarette tax the 10th-highest in the nation and
also allowing the State to collect much needed funding.
Pennsylvania’s credit rating has been badly damaged by the long-term
deficit. Pennsylvania’s Department of Revenue estimates that the
higher cigarette tax will generate another $425 million a year for the
state treasury. This will stimulate Pennsylvania’s economy and will
It is also estimated that cigarette sales will decline 9 percent, due to
both the tax increase and an increase in the minimum retailer markup from
6 percent to 7 percent in the same law.