NATO: Retail sales could take $ 800 million if federal tobacco tax increases are passed

NATIONAL REPORT – A proposal to increase the federal excise tax on tobacco will not only impact the wallets of adult consumers. This will impact everything from retail sales and tax revenues to the national economy as a whole.

According to a study commissioned by the National Association of Tobacco Outlets (NATO) and compiled by Chmura Economics and Analytics, any increase in federal taxes on cigarettes, tobacco and vapers will have a significant negative economic impact at the national and state levels.

“The significant federal tax increases proposed in the Congressional Reconciliation Budget Bill would have a significant negative economic impact not only on retail stores, distributors and their employees, but also on states, cities and towns. local communities, NATO said.

The Tobacco Tax Equity Act of 2021 would close loopholes in the tobacco tax code by increasing the federal tax rate on cigarettes, pegging it to inflation, and fixing the federal tax rate for all tobacco products. other tobacco products at the same level. It is part of the $ 3.5 trillion federal reconciliation program, as Convenience Store News Previously reported.

Notably, an increase would result in a loss of $ 801 million in retail sales; a decrease of $ 1.135 billion in national and local tax revenues; 14,030 jobs lost; and a loss of $ 1.679 billion to the national economy.

Referring to market data, the association said sales of cigarettes and other tobacco products accounted for more than a third of in-store sales at U.S. convenience stores and about 90 percent of sales at tobacco stores. .

In addition, about 3.8 million employees nationwide work in stores that sell tobacco products. National and local excise taxes and sales taxes levied on these products are also essential sources of revenue for states and communities across the country, NATO said.

“The proposed increases to federal taxes on cigarettes and tobacco products in the budget reconciliation bill would result in major market disruptions and substantial economic impacts. package to $ 2.02 per package, while increasing tax rates on other tobacco products by up to 2,000 percent, ”NATO explained.

“Such drastic increases in federal excise tax rates will reduce sales, result in layoffs of employees, result in lost wage income, reduce local and state sales and excise tax collections, and reduce payments. of the Master Settlement Agreement to all US states and territories (including the four separate settlement states), ”he added.

To read the whole Economic impact report, Click here.

More Stories
The influx of foreign donations continues for ‘Odette’-hit PH