A study by the West Virginia University College of Business and EconomicsBureau of Business and Economic Research has concluded that Gov. Bob Wises proposed 38-cent tax increase on cigarettes would yield between $57 million and $71 million in new revenues next year.

The governors proposal would bring the total tax on a pack of cigarettes to 55 cents.
The study considered not only the increase in taxes collected directly from each pack of cigarettes sold, but also accounted for changes in personal income tax, consumer sales tax, business franchise tax and corporate net income tax, areas that would be affected by an increase in the cigarette tax.

Several neighbor states have recently increased cigarette taxes, and Wise proposed his increase in his State of the State address Jan. 8. The tax would be lower than that of Pennsylvania and Maryland, equal to Ohios, and greater than Kentuckys and Virginias.

The $14 million difference in the range of revenues accounts for the fact that some current smokers will decide to quit or decrease their use of tobacco.

That number is hard to predict, said Mehmet Tosun, a bureau research assistant professor who conducted the study.

“In every scenario we looked at, the impact on state tax revenues is positive,”said Tosun, who is director of the bureaus West Virginia Public Finance Program.”But we don’t know for sure how responsive consumers of cigarettes would be to an increase in the price of cigarettes.”

The complete study is available on the bureaus Web site atwww.bber.wvu.edu.

The Bureau of Business and Economic Research conducts objective business and economic research with a focus on West Virginia and the region, providing support for West Virginia University economic development and outreach programs. It also provides business and economic development support and other services and training throughout the state. In addition, the bureaus mission is to disseminate information, research findings, and data products to the private and public sectors.