Chapter 1

General Overview

South Carolina imposes a tax on cigarettes and a tax on tobacco products.1 These taxes are imposed for the privilege of selling cigarettes and tobacco products within South Carolina and for the privilege of importing, receiving or acquiring cigarettes and tobacco products from outside of South Carolina or from any source for use or consumption within South Carolina.

A. Cigarettes 
The following provides a short history of the taxation of cigarettes from 1923 until the present. It is not intended to be a complete history, but is provided for information purposes as to the method of taxation and the tax rates imposed on cigarettes over the years.

In 1923, the tax imposed on cigarettes was based on the weight of 1000 cigarettes. Cigarettes weighing not more than 3 pounds per 1000 cigarettes were taxed at $1.00 per thousand and cigarettes weighing more than 3 pounds per 1000 were taxed at $2.41 per thousand.

In 1924, the method of taxation changed so as to tax cigarettes on a per package basis depending on the retail selling price. Packages retailing for $0.10 or less were taxed at $0.01 per package and packages retailing for more than $0.10 were taxed at $0.01 per package plus an additional $0.01 for each $0.05 or fraction thereof of the selling price in excess of $0.10.

In 1927,4 the method of taxation remained the same but the rates were changed. Packages retailing for $0.05 or less were taxed at $0.01 per package and packages retailing for more than $0.05 were taxed at $0.01 per package plus an additional $0.01 for each $0.05 or fraction thereof of the selling price in excess of $0.05. 

In 1942, the method of taxation was changed once again to tax cigarettes on a per cigarette basis. This is the method still in place today; however, the rates imposed have changed over the years as follows 
1942 – 1½ mills per cigarette or $0.03 per pack of 20 cigarettes 
1950 – 2½ mills per cigarette or $0.05 per pack of 20 cigarettes 
1951 - 1½ mills per cigarette or $0.03 per pack of 20 cigarettes 
1959 - 2½ mills per cigarette or $0.05 per pack of 20 cigarettes 
1960 - 2½ mills per cigarette or $0.05 per pack of 20 cigarettes 
1969 - 3 mills per cigarette or $0.06 per pack of 20 cigarettes 
1977 – 3½ mills per cigarette or $0.07 per pack of 20 cigarettes 
2010 - $0.0285 per cigarette or $0.57 per pack of 20 cigarettes 
As of the date of this publication, the tax on cigarettes remains at $0.0285 per cigarette or $0.57 per pack of 20 cigarettes. 

Finally, for many years the tax on cigarettes was paid via a stamp that was required to be adhered to each individual package of cigarettes. The stamp method of administering and collecting the cigarettes taxes was abandoned in 1995 in favor of a reporting method that is still in place today. Persons liable for the cigarette tax must file a return on or before the 20th of the month following the month in which the sale, distribution or disposition of the cigarettes occurred. Payment of the cigarette tax due must be remitted with each return.

B. Tobacco Products 
The following provides a short history of the taxation of certain tobacco products from 1923 until the present. It is not intended to be a complete history, but is provided to information as to the method of taxation and the tax rates imposed on certain tobacco products over the years. 

In 1923, pipe tobacco was taxed at a rate of $0.06 per pound. A special commission ruled that the tax was a tax on pipe tobacco only and did not apply to plug chewing tobacco or snuff.

In 1924, a tax on smoking tobacco was imposed at a rate of $0.01 per 3 ounces or fraction thereof. Smoking tobacco included granulated plug cut, crimp cut, ready rubbed and other kinds and forms of tobacco prepared in such a manner for smoking in a pipe or cigarette.

In 1925, snuff and chewing tobacco were taxed at a rate of $0.01 for each 3 ounces or fraction thereof.

In 1927, the method of taxation changed so as to tax smoking tobacco on a per package basis depending on the retail selling price. Packages retailing for $0.10 or less were taxed at $0.02 per package and packages retailing for more than $0.10 were taxed at $0.02 per package plus an additional $0.01 for each $0.10 of the selling price.

In 1928, the method of taxation for smoking tobacco remained the same but the rates were changed. Packages retailing for $0.05 or less were taxed at $0.01 per package and packages retailing for more than $0.05 were taxed at $0.01 per package plus an additional $0.01 for each $0.05 of the selling price.

In 1959, the tax rate on smoking tobacco and snuff and chewing tobacco were changed. Packages of smoking tobacco retailing for $0.10 or less were taxed at $0.02 per package and packages retailing for more than $0.10 were taxed at $0.02 per package plus an additional $0.02 for each $0.05 of the selling price. Packages of snuff and chewing tobacco were taxed at $0.01 for each 2 ounces or fraction thereof. These were temporary rate changes for the 1959-1960 State fiscal year only. However, in 1960, these tax rates were made permanent.

In 1962, the tax rate on smoking tobacco and snuff and chewing tobacco were changed. Packages of smoking tobacco retailing for $0.05 or less were taxed at $0.01 per package and packages retailing for more than $0.05 were taxed at $0.01 per package plus an additional $0.01 for each $0.05 of the selling price. Packages of snuff and chewing tobacco were taxed at $0.01 for each 3 ounces or fraction thereof.

In 1968, the stamp method of administering and collecting the taxes on all tobacco products was abandoned in favor of a reporting method that is still in place today. In addition, the tax rate on smoking tobacco was changed to 30% of the manufacturer’s price to the wholesaler and the tax rate on snuff and chewing tobacco was changed to 5% of the manufacturer’s price to the wholesaler.

In 1969, the tax rate on smoking tobacco was increased to 36% of the manufacturer’s price to the wholesaler.

Finally, in 1996, the tax rate on smoking tobacco and all other tobacco products was changed to 5% of the manufacturer’s price to the wholesaler.27 As of the date of this publication, the tax on all tobacco products remains at this rate. 

The statutes imposing the tax on cigarettes and tobacco products can be found in Article 5, Chapter 21 of Title 12 of the South Carolina Code of Laws.