Alabama Tobacco Tax Hike Expands

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Alabama Tobacco Tax Hike Expands

MOBILE, Ala. -- The Mobile City Council passed a 10-cent tax on cigars, pipe tobacco and smokeless tobacco this week, one week after voting to increase the city's cigarette tax to 15 cents a pack. Both taxes will go into effect Oct. 31.

The cigarette tax increase will help pay city employees, according to the Mobile (Ala.) Register. There already is demand for the money, estimated at $150,000 per year.

The ordinance places a 10-cent tax on each cigar -- except for packages of "little cigars, including cigarette-sized or near cigarette-sized cigars," which are taxed 10-cents per package -- along with 10 cents for each package of loose tobacco for pipes and cigarettes, each package of smokeless tobacco and each package of rolling paper.

The tax is on the wholesaler and is in addition to the sales tax placed on tobacco items at the retail level. It is widely assumed, however, that a tax on the distributor is passed on to the retailer and then to the customer, the report said.

Because the tax is new, it's unclear exactly how much it will bring in, said Gina Gregory, city spokeswoman. She said the $150,000 figure is a "low-end estimate."