Reagan Signs 45-Day Cigarette-Tax Extension

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Washington--President Reagan signed into law last week a 45-day extension of the 16-cents-a-pack federal tax on cigarettes, preventing 17 states from capturing part of the tax to support education and other state services.

The tax, doubled in 1982 as a "temporary revenue enhancement," was scheduled to revert to 8 cents a pack on Oct. 1. Anticipating that, more than 20 states passed legislation this year to increase their cigarette taxes, including the 17 whose assumption of the tax was contingent on its expiration at the federal level. In several of the states, the expected revenues from the tax were tied to education reform.

The House Ways and Means Com-mittee and the Senate Finance Committee have both approved bills that would make the 16-cent tax permanent, but the Congress has yet to act on the measures.

Cigarette-tax increases went into effect last week in several states that did not tie their increases to action at the federal level, including Maine and Kansas, both of which earmarked tax revenues for education reform.--jrs

Vol. 05, Issue 06

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