International 1

International affairs: Tobacco Taxes (2013-31)

By modifying tobacco tax rates to eliminate tax differentials between similar tobacco products Congress could reduce federal revenue losses from substitution, which were as much as $2.5 to $3.9 billion between April 2009 and September 2018. For example, if the pipe tobacco tax rate were equal to the higher rate for similar products, it could increase revenues by an estimated $1.3 billion between fiscal year 2019 and fiscal year 2023.

Year Identified: 2013
Area Number: 31
Area Type: Cost Savings & Revenue Enhancement

2 Total Action(s)

Action 1
Not Addressed

Congress, as it continues oversight of the Children's Health Insurance Program Reauthorization Act, may wish to consider equalizing tax rates on roll-your-own and pipe tobacco.

Type
Congressional
Last Updated
March 31, 2022
Progress:

No legislative action has been identified. As of March 2022, Congress did not pass legislation to equalize taxes on roll-your-own and pipe tobacco. GAO's April 2012 report noted that prior federal and state legislation has aimed to discourage tobacco use and raise revenues by increasing excise taxes on tobacco products. Modifying tax rates to eliminate the tax differentials between roll-your-own and pipe tobacco could address potential future revenue losses stemming from the substitution of higher-taxed products with lower-taxed products.

Implementing Entity:
Congress
Action 2
Not Addressed

Congress, as it continues oversight of the Children's Health Insurance Program Reauthorization Act, may wish to consider, in consultation with the Department of the Treasury, options for reducing tax avoidance due to tax differentials between small and large cigars.

Type
Congressional
Last Updated
March 31, 2022
Progress:

No legislative action has been identified. As of March 2022, Congress did not pass legislation to address tax differentials between small and large cigars. GAO's April 2012 report noted that prior federal and state legislation has aimed to discourage tobacco use and raise revenues by increasing excise taxes on tobacco products. Taking action to eliminate tax differentials between small and large cigars could address potential future revenue losses stemming from the substitution of higher-taxed products with lower-taxed products.

Implementing Entity:
Congress
GAO Contacts