Consumers don't have to wait for the Bush tax cuts to be repealed in order to pay higher taxes. Individual states are hiking tax rates on the sale of retail items, gasoline and cigarettes. Over the last year, 11 states have hiked taxes on cigarettes, five have increased their gasoline tax and five have increased their state sales taxes, according to a recent survey of state consumption taxes.

"From the increases in consumer taxes, it's evident that many states are trying to shore up revenue shortfalls," said Daniel Schibley, senior state tax analyst for CCH, a subsidiary of tax and accounting services firm Wolters Kluwer (WTKWY) which conducted the survey. "Many other states have not yet increased taxes, but may."

Lately, cigarette taxes have been the tax of choice for cash-strapped states. Connecticut, Delaware, Hawaii, New Hampshire, New Mexico, New York, North Carolina, Pennsylvania, South Carolina, Washington, Wisconsin and the District of Columbia have all raised their taxes on cigarettes since last year. The largest percentage hike was in South Carolina where the state raised its cigarette tax from 7 cents per pack to 57 cents. The most expensive tax on cigarettes is in New York where the rate climbed to $4.35 per pack from $2.75 last year.

State sales taxes were raised in Arizona, Kansas, Massachusetts, New Mexico, North Carolina and Washington D.C. over the last year. The smallest increase came in New Mexico, which raised its sales tax rate from 5% to 5.125%. Massachusetts had the heftiest increase last year, its rate jumped from 5% to 6.25%. While five states – Alaska, Delaware, Montana, New Hampshire and Oregon – still impose no sales tax, 25 states and the District of Columbia now have a sales tax of 6% or more, the report said.

Gasoline taxes have also been on the rise during the last year, as California, Kentucky, Minnesota, Nebraska, North Dakota and Washington D.C. have all raised their rates. Drivers in Minnesota saw a minimal increase from 27.1 cents to 27.5 cents per gallon, while California's drivers saw taxes at the pump almost double, going to 35.3 cents per gallon from 18 cent per gallon last year.

The survey noted that consumers may actually wind up paying even higher rates in gasoline, sales and cigarette taxes because: Taxes and fees related to environmental impact, licenses and inspections are often added to gasoline taxes in some states; city and other local jurisdictions may add their own sales taxes on top of state sales taxes; and cities, counties, and the federal government, may also impose additional taxes on tobacco products. With these consumption taxes already in affect, the trend toward higher taxes has already begun.

Increase your money and finance knowledge from home

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

What is Inflation?

Why do prices go up?

View Course »

Add a Comment

*0 / 3000 Character Maximum

9 Comments

Filter by:
jackie

It seems like the Gov. is taxing everything except alcohol ,beer ect, i wonder
how many have stock in the brewery,s as to why they will not pass a tax on them like they do everything else.

August 10 2010 at 6:40 AM Report abuse +2 rate up rate down Reply
dajewelman

We are at a very critical part of this country's history. We lack serious leadership from both parties. Our whole system is corrupt and not to bright. The fact that they just raise taxes on whatever they like just shows the lack of understanding our very own problems. The time is coming very soon when a smart attorney will come forward and sue some of these states for discrimnatory and punitive taxes.New York especially. Taxes were never meant to be punitive or discriminate . Smokers for instance continue to be absolutely hammered in taxes.In some cases the tax on some cigars is actually 5 times the actual cost of the product. If thats not punitve I don't know what is. Quite frankly you can classify that as a form of racism. If I was a smoker I would be looking to buy illegally. They better not mess with my wine.

August 10 2010 at 12:00 AM Report abuse +1 rate up rate down Reply
bill griffis

how can u buy anything anymore all u do is pay taxes for the governments payrolls and pensions and entitlements shortfalls

August 09 2010 at 11:06 PM Report abuse +5 rate up rate down Reply
Alan

Hmmm-The Obama Team wants to redistribute wealth from the rich to the poor--the rich drink wine and vodka, the poor drink beer. The rich tend not to smoke, the poor tend to smoke, as a percentage of income the gas taxes affect the rich much less than the poor, new healthcare costs,rising premiums affect the poor more than the rich, if the cap and trade goes through, who needs to worry more about higher utility rates? If you are old and poor, your medicare benefits are going to be less. If you are poor, lets face it---your present and future paycheck is going to shrink---so who are you going to vote for in November?

August 09 2010 at 10:16 PM Report abuse +5 rate up rate down Reply
cm5605

How about cutting the salaries of State employees by 50% and then voting them out of office and replacing them with representatives that will represent the interest of the people that put them in office and not their own political agendas, and set some term limits? Sounds like a plan we could use in Washington too

August 09 2010 at 9:46 PM Report abuse +7 rate up rate down Reply
pkatcher

when the price of Gas was over $4 THAT was the BEST time to effect tax increases. As the public got used t othe higher fuel costs, raising gas tases as the fuel price DECREASED would have broug hMILLIONS intostate budgets... but of course politicians have no guts..

August 09 2010 at 8:41 PM Report abuse -3 rate up rate down Reply
diamondhdrty

Quit picking on the smokers for extra revenues, shame on the States. This is the way to increase revenues, as I have suggested to the Governor, and the Mayor of California.but no one has the guts to fight the Liquor Indusrty. Only 25 % of the population smokes and 90 % of the population Drink some kind of liquor, it is not fair for the smokers to take a hit on the taxes.
This is my suggestion and lets see who has the guts to fight the liquor industry: Raise the tax on a six pack of Beer to $1.00, a bottle of wine $2.00, and hard Liquor to $3.00. Also add a $.25 Tax at the bar for each drink . A bottle of hard liquor makes about 20 drinks, x $.25 = $5.00 , When a bottle is sold to the bar add the $5.00 Tax up front . Wow ! that will end all the money problems all off the States are having.
I, am a smoker.

August 09 2010 at 7:56 PM Report abuse +7 rate up rate down Reply
socialeconomist3

They need to jack up cigarettes to the point of me not smelling them in public anymore.... I would honestly rather smell weed that has the aromy of Skunk poop than the chemical smell of cigarettes

August 09 2010 at 7:48 PM Report abuse -6 rate up rate down Reply
tom

Now, I seem to remember Obama saying he wouldnt raise taxes on anyone making less than 250K. I must have a secret paycheck going somewhere that I dont know about. I just looked at my cable/phone/Internet bill. Wow, over a dozen add ons that have a different name. Fees, surcharges, commodity charges, etc etc. Cigs at 10$ a pack, gas taxes, DMV taxes, and the list goes on. They could double our taxes, but it wont make a difference on the budget, because........they will spend that too!

August 09 2010 at 7:11 PM Report abuse +7 rate up rate down Reply
standfordgrays

$25 for a pack of generic cigarettes sounds about right

August 09 2010 at 6:34 PM Report abuse rate up rate down Reply