Tobacco Taxes North Carolina's excise tax per pack of cigarettes: $0.050 North Carolina's excise tax collection for the fiscal year ending June 2002: $40,309,132 Sales tax on tobacco products: 4.00% Local tax on tobacco products: $6,000,000 Federal excise tax per pack of cigarettes: $0.39 Total federal excise tax collections in fiscal year 2002: $7,512,700,000

Who Profits from Cigarette Sales? click for larger view

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Number of six-packs of beer that must be sold in North Carolina to produce the same state excise tax revenue generated by one carton of cigarettes: 1.7

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Number of bottles of wine that must be sold in North Carolina to produce the same state excise tax revenue generated by one carton of cigarettes: 3.2

North Carolina Smokers' Contributions
to the State Economy - FY2004

In 2003, North Carolina smokers comprised only 24.8% of the adult population in the state.  Here is what they already pay because they choose to buy a legal product:

• Smokers Pay Excise Taxes             $ 40,193,000

• Smokers Pay Sales Taxes                                                                                      $112,540,000


• Smokers Pay Tobacco Settlement Payments                                                      $144,987,000

                                                                                                                                               $297,720,000

Smokers’ Economic/Tax Profile 2003

·         Income

Ø      North Carolina smokers’ median household income                                                  $28,070

Ø      North Carolina nonsmokers’ median household income                                           $39,355

·         Working families pay more

Ø      45.5% of North Carolina smokers had household incomes LESS THAN $25,000

Ø      12.3% of North Carolina smokers had household incomes EQUAL TO or GREATER

THAN $75,000

The impact of smoker payments on the incomes of working families was more than THREE TIMES the impact on higher income smokers.  Those who can afford it least pay a disproportionate percentage of their hard-earned income in smoker payments. 

·         Smoker excise tax/sales tax/tobacco settlement payments liability in FY2004

Ø      Total average paid per North Carolina smoker in excise and sales taxes                   $101

Ø      Cost per North Carolina smoker for settlement payments to North Carolina              $  96

Total annual payments to North Carolina per smoker                                         $197

            Total annual payments to North Carolina per nonsmoker                                       $0

North Carolina Smoker Facts

·         Total North Carolina smokers’ payments in FY2004 were:

Ø      Larger than state excise taxes on alcoholic beverages in FY2004 ($210.8 million).

Ø      Larger than FY2004 utility excise taxes ($205.9 million).

Ø      Over twice as large as  FY2004 estate tax revenues ($128.5 million).

·         North Carolina FY2004 smoker payments were large enough to support costs of FY2004 approved state budgets for:

Ø      UNC at Chapel Hill Health Affairs and Area Health Education ($225.1 million);

Ø      UNC-Greensboro ($132.3 million)  AND   UNC-Charlotte ($153.4 million) COMBINED;

Ø      UNC-Asheville ($31.6 million)  AND  UNC-Wilmington ($89.5 million), and Western Carolina University ($67.6 million) COMBINED;

Ø      The Department of Environment and Natural Resources ($259.4 million)

·         In 1997, smokers provided 122,389 jobs that paid an additional $211.3 million

to the state in personal and corporate income taxes.

TOTAL SMOKER CIGARETTE PAYMENTS TO NORTH CAROLINA FY2004 Per year:        $297,720,000 Per day:          $       815,113 Per hour:        $         33,963 Per minute:    $             566 Per second:   $                 9

 

CIGARETTES DON’T PAY TAXES – NORTH CAROLINA SMOKERS DO!!

North Carolina Smokers' Contributions
to the State Economy - FY2003

Smokers Pay Excise Taxes2	$	40,314,000
Smokers Pay Sales Taxes2	$	95,968,000
Smokers Pay Tobacco Settlement Payments3	$	335,320,000
	$	471,602,000

• Income1

North Carolina smokers' median household income	$	29,424
North Carolina nonsmokers' median household income	$	38,042

• Working Families Pay More1

42% of NC smokers had household income LESS THAN $25,000




9% of NC smokers had household income EQUAL to or GREATER THAN $75,000




The impact of smoker payments on the incomes of working families was more than THREE TIMES the impact on higher income smokers. Those who can afford it least pay a disproportionate percentage of their hard-earned income in smoker payments.

• Smoker excise tax/sales tax/tobacco settlement payments liability in 20024

Total average paid per North Carolina smoker in excise and sales taxes	$	85
Cost per North Carolina smoker for settlement payments to North Carolina	$	209
Total annual payment to North Carolina per smoker	$	294
Total annual payment to North Carolina per nonsmoker	$	0

TOTAL SMOKER CIGARETTE PAYMENTS TO NORTH CAROLINA FY2003 Per year: $ 471,602,000 Per day: $ 1,291,176 Per hour: $ 53,799 Per minute: $ 897 Per second: $ 15

1 Centers for Disease Control's Behavioral Risk Factor Surveillance System, 2002
2 Orzechowski & Walker, Arlington, Virginia; from state revenue department.
3 PriceWaterhouseCooper
4 U.S. Census Bureau, 2000 state population and Centers for Disease Control's Behavioral Risk Surveillance System, 2002
5 Tax and Budget Comparisons are from the North Carolina Office of State Budget, 2003-2005 Post Legislative Budget Summary online at http://www.osbm.state.nc.us/files/pdf_files/bgt0305summary.pdf, and 2001-2003 Post Legislative Budget Summary, online at http://www.osbm.state.nc.us/files/pdf_files/2001-03pls.pdf.
6 American Economics Group, Inc., The U.S. Tobacco Industry in 1997: Its Economic Impact in the States.

A summary of North Carolina state law is provided below
(for specific questions regarding state law, contact your legal advisor.)

Minimum Age	Customers must be 18 years or older to purchase tobacco products. Aiding, assisting or abetting another person in selling or distributing tobacco products or cigarette papers to minors is prohibited. Purchasing tobacco products or cigarette papers on behalf of minors is prohibited. Retail distributors of tobacco products shall train their sales employees in the requirements of this law.
Restricted Products	Any product that contains tobacco or cigarette wrapping papers.
Acceptable Forms of Identification	A driver’s license or other photographic identification that includes the bearer's date of birth that purports to establish that the person is 18 years of age or older.
Fine/Penalty Schedule for Selling to Minors	Violators will be guilty of a Class 2 misdemeanor and subject to a fine of up to $1000 and/or 30 days community service. The failure to demand proof of age from an underage purchaser is a Class 2 misdemeanor.
Affirmative Defense	Proof that the defendant demanded, was shown, and reasonably relied upon proof of age, or that the defendant relied on the electronic system established and operated by the Division of Motor Vehicles, shall be a defense.
Minor Possession	Purchasing or receiving, or attempting to purchase or receive, tobacco products or cigarette wrapping papers by minors is prohibited, except when required in the course of employment. Any person who presents purported proof of age which is false, fraudulent, or not actually his or her own for the purpose of purchasing or receiving any tobacco products or cigarette wrapping papers will be guilty of a Class 2 misdemeanor.
Sign Requirement	Retailers shall prominently display near the point of sale a sign in letters at least 5/8 inch high which states the following: N.C. LAW STRICTLY PROHIBITS THE PURCHASE OF TOBACCO PRODUCTS BY PERSONS UNDER THE AGE OF 18. PROOF OF AGE REQUIRED. Failure to post the sign shall be an infraction with a penalty of $25 for the first offense and $75 for subsequent offenses.
Compliance Checks	As a condition of receiving federal substance abuse block grant funds, federal law requires the state of North Carolina to conduct random, unannounced inspections of tobacco outlets to determine compliance rates. The Department of Health and Human Services shall have the authority to use persons under 18 years of age in such inspections, provided that prior written parental consent is given for the involvement of these persons and that the inspections are conducted for the sole purpose of preparing a valid statistical study of the extent of success the state has achieved in reducing the availability of tobacco products to minors.
DISCLAIMER: This information summary is provided as a service of the Coalition, but is not intended to provide legal advice or analysis. These summaries are not intended to be complete representations of state law, which may contain additional rules and restrictions relating to tobacco products not mentioned in this summary, as well as retailing prohibitions related to matters including, but not limited to, state required training, minimum pack size, the sale of loose cigarettes and other restrictions. Retailers should not rely on these summaries as complete or accurate descriptions of applicable federal, state or local law. Users with questions about the law should seek the advice of counsel. Each state law is unique and possibly represents multiple legislative or regulatory acts. Local laws may differ. Check with local authorities for variations from state law. These summaries are not intended to be complete representations of state law.

The reprinting of this information from the Coalition, does not constitute a representation or admission by RJRT that such information is accurate, complete, or a proper characterization of the laws concerned. The Coalition for Responsible Tobacco Retailing is a cooperative effort among retailers, wholesalers and manufacturers who share a common goal: to do all they can to prevent tobacco sales to minors.

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