Iowa Cigarette Tax Revenue Declining

Following a statewide smoking ban in most public places, Iowa has seen its cigarette tax revenue fall by 9% over the past six years.

November 12, 2013

DES MOINES, IA — In the wake of a statewide ban on smoking in most public places and a federal tobacco tax increase, Iowa cigarette tax revenue has been steadily falling over the past several years, The Des Moines Register reports.

Since 2008, overall cigarette and tobacco tax revenue has fallen by more than 9% in the Hawkeye State.

“Revenue is hopefully down because fewer people are smoking,” said Polly Carver-Kimm, communications director for the Iowa Department of Public Health. “The cigarette tax should not be used to generate revenue or support ongoing state expenditures, but rather to motivate people to stop smoking and deter young people from starting.”

Health officials said about 16% of adult Iowans were smokers in 2010, compared to about 20% in 2007 — the same year cigarette taxes rose by $1 a pack.

Cigarette/tobacco tax revenues rose from $134 million in fiscal year 2007 to nearly $251 million in fiscal year 2008. However, Iowa is now on track to collect roughly $227 million in cigarette and tobacco taxes for the 2014 state fiscal year, a 9% drop over a six-year period.

Iowa implemented the Smokefree Air Act in July 2008, which bans smoking in most public and enclosed spaces. Additionally, the federal government raised cigarette and tobacco taxes in 2008, a one-two punch that has led to the state’s falling revenue.

“Although the actual impact of these two events on Iowa cigarette and tobacco tax revenue is difficult to measure, the result appears to have reduced Iowa cigarette tax revenue,” said Iowa state fiscal analyst Shawn Snyder.

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