Public Finance Review
This paper uses new data collected by the author on cigarette taxation in 443 municipalities from 1990 to 2009. These data are combined with state-level price and tax information to measure the relative effects of state and local taxes on cigarette prices. The results suggest that a $1 increase in the state excise cigarette tax increases cigarette prices by $1.10 to $1.13, but that a $1 increase in city or county-level excise taxes has a significantly smaller positive effect on prices of $1.06. These findings are similar between premium and generic cigarette brands.