Government Monopoly

Cigarettes are one of the most heavily taxed consumer products in the United States. Federal, state and local governments have a virtual monopoly on tobacco profits, collecting more money from the sale of cigarettes than retailers, wholesalers, farmers and manufacturers combined.

Federal, state and local taxes on cigarettes for fiscal year 2006 amounted to more than $32.5 BILLION.

• The government per-pack profit from cigarettes in 2006 was $2.09 (or 52 percent of the cost of a pack of cigarettes), nearly 9 times the profit for R.J. Reynolds Tobacco Company.
• In 2006, government pocketed more tobacco revenue per minute ($61,896) than the average working family brought home in a year ($46,588).

But excise taxes are just one source of government revenues from tobacco. After many years of intense national debate, the major issues regarding cigarette marketing and underage smoking were comprehensively addressed through a Master Settlement Agreement, signed Nov. 23, 1998, by the major U.S. tobacco companies and 46 states and a number of U.S. territories. The provisions of that settlement were similar to those in individual settlements previously reached with the other four states (Florida, Minnesota, Mississippi and Texas).

From 1998-2005, federal, state and local governments collected more than $250 BILLION in tax and Master Settlement Agreement/state payments.