D.C. will soon join Maryland with a $2 sales tax, the sixth-highest rate in the country, on every pack of cigarettes, generating as much as $12.5 million more for city coffers.
The $2 tax, double the current charge, will take effect Oct. 1. The District’s rate is still puny compared with other large jurisdictions, such as New York City, which levies $2.75 per pack on top of New York state’s $1.50 per pack. But it far eclipses Virginia, home to Philip Morris, which charges 30 cents per pack.
Cigarette tax revenues were up 5.9 percent in D.C. through the first seven months of the year compared to the same period in 2007, despite a near 2-year-old smoking ban and an aggressive anti-tobacco stance. The District had collected $18.26 million through July.
“It’ll take another $3 or $4 a pack before I quit,” said Randy Smith, who was enjoying a Marlboro on Friday outside the Starbucks at 15th and K streets.
D.C. leaders and anti-smoking advocates hope the higher tax rate spurs some smokers to quit, deters youth from picking up the habit and generates significant revenue for health programs.
“It’s really geared at stopping [youth smokers] for the most part, because they just can’t afford it as it creeps higher,” said Victoria Wells, director of D.C. government relations with the American Cancer Society.
The cigarette tax is only one of several new or increased fees slated to take effect Oct. 1.
» The cost of a D.C. driver’s license will increase from $39 to $44, and the cost of a motor vehicle inspection will go up from $25 to $35. The trade-off: Driver’s licenses will be extended from five to eight years, and vehicle inspections will be required every four years, instead of every two.
» Roughly 14,000 businesses will be required to pay $200 every two years for a “general business license.” The “general” license will be mandatory for businesses currently not required to have a “basic business license,” the cost for which will double from $35 to $70. Combined revenue from the two license fees: $4.7 million.
— Fiscal 2009 ushers the end of the 6 percent tax exemption for hybrid vehicles. Only vehicles that get at least 40 mpg, and very few do, will earn that valuable exemption.
