Miles Trinidad, State Analyst for the Institute On Taxation And Economic Policy, said on June 23 that Delaware’s proposed cigarette tax functions as a consumption tax that takes a larger share of income from people least able to afford it.
“So even though there’s these minor hikes on vehicle registration fees or small increases in cigarette and tobacco products or anything else they may consider, that’s more of a consumption tax,” Trinidad said on LinkedIn. “With less income, they’re much harder hit.”
Delaware House Bill 215 would increase the state cigarette tax from $2.10 to $3.60 per pack. The bill also proposes raising the tax on moist snuff from 92 cents to $1.23 per ounce, increasing the tax on other tobacco products from 30% to 45% of the wholesale price, and lifting the tax on vapor products from 5 cents to 25 cents, according to the Delaware General Assembly.
Trinidad’s argument is supported by data showing that such taxes are regressive. The Institute On Taxation And Economic Policy (ITEP) says cigarette taxes are regressive because a fixed per-pack tax consumes a larger share of income for low-income smokers than for wealthy households. In ITEP’s cited example, the poorest 20% of non-elderly Americans spent 0.9% of their income on cigarette taxes on average, while the wealthiest 1% spent less than 0.1%, making the tax roughly ten times more burdensome at the bottom.
Delaware’s own tobacco data show why a cigarette tax hike is especially tough on people with lower incomes: adult smoking prevalence is highest among residents earning less than $24,999 a year, at 26%. That means the group with the least disposable income is also the group most likely to pay the higher tax, reinforcing Trinidad’s argument that the burden is tilted downward, Delaware’s own tobacco data shows.
Federal public health researchers at the Centers for Disease Control and Prevention have found that significant differences in tobacco taxes and prices can contribute to illicit tobacco trade, including tax avoidance and evasion across jurisdictions. The agency says those gaps can create incentives for untaxed or lower-tax cigarettes to move into higher-tax areas, complicating enforcement and reducing expected revenue gains.
Trinidad is a State Analyst at ITEP, where he researches and monitors state tax policy to support advocates and lawmakers. ITEP describes itself as a nonprofit, nonpartisan organization producing data-driven analysis on equitable and sustainable tax systems.
