Dayton's cigarette tax hike would make Minn. 8th highest rate nationwide

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Gov. Mark Dayton wants to increase cigarette tax nearly $1 as part of his two-year budget proposal announced Tuesday.

The tax would add 94 cents on top of the current tax of just under $1.60, taking Wisconsin's spot for the 8th highest cigarette tax in the country at $2.53, according the the Federation of Tax Administrators January report. The nation's highest tax is in New York at $4.35 per pack.

Just last week, the American Lung Association gave Minnesota a "C" grade for cigarette excise tax. The organization would like to see taxes over $2.98, so more smokers can no longer afford to buy cigarettes.

According to the "State of Tobacco Control" report, research shows that for each 10 percent price increase, consumption drops by about 7 percent for youth and 4 percent for adults.

The American Lung Association in Minnesota says a lower smoking rate could also save the state money over the long term. Smoking costs Minnesota nearly $3 billion in health care costs each year.

A higher tax rate may not bring in the $370 million in projected revenue due to smuggling, KSTP reports.

In 2011, Minnesota brought in $296 million in cigarette tax revenue. According to the Mackinac Center for Public Policy, a conservative, free-market think tank, one out of five cigarettes smoked in the state that year was smuggled in from states with lower tax rates, translating into about $58 million in lost tax revenue.

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