Tuesday, December 06, 2005

Minnesota Tobacco Tax Increase Helps Boost North Dakota's Collections

Minnesota's recent tobacco tax increase has been a boon for North Dakota's treasury, which has seen its expected collections jump 13.6 percent in four months.
The state Office of Management and Budget, in a monthly report on tax collections, reported $7.6 million in North Dakota tobacco tax revenues from July through October. The sum is $915,272 ahead of what was forecast when the Legislature finished work on the state's two-year budget. "This appears, in part, to be a result of cross-border buying by Minnesota residents avoiding the comparatively higher cigarette and tobacco tax rates in their own state," the agency said in its report. North Dakota has a 44-cent tax on a pack of cigarettes. On Aug. 1, Minnesota's tax on a pack rose to $1.23, a 75 cent increase that Minnesota officially terms a health impact fee. Kathleen Mangskau, the state Health Department's tobacco prevention coordinator, said the increase is not surprising, but it may not last. "As time goes on, it drops down," she said. "You typically see that (spike) when you see a dramatic increase in cost from one area compared to another."