President Barack Obama wants to increase cigarette tax by 94 cents per pack

$3.8 trillion budget includes cigarette tax hike

WASHINGTON - President Barack Obama has unveiled a $3.8 trillion budget for 2014 that would nearly double federal tax on cigarettes.

Under the plan, cigarettes would increase by 94 cents per pack. The tax would raise an estimated $78 billion over the next decade, with those funds slated to pay for early childhood education.

The total budget plan would increase taxes by $580 billion over the next decade, but it relies on many proposals that have been repeatedly rejected by Congress.

Some were rejected as recently as January, when Congress voted to make permanent a series of tax cuts first enacted under President George W. Bush.

Among them was a proposal to limit itemized deductions for high-income families.

Obama said his tax plan is part of a balanced approach to deficit reduction that includes painful cuts to benefit programs like Social Security and Medicare.

Most GOP lawmakers, however, adamantly oppose new taxes.

Indiana is among one of the states with the most smokers per capita with about 25 percent of Hoosiers lighting up.

Randy Biggs, who owns Randy's Tobacco Shop in Indianapolis, said he thinks the tax hike would cause more harm than good.

"At some point the regulations and taxes will get so much that the black market will take over," Biggs said. "And that's going to be a loss for everybody -- a loss in sales for the retailer, a loss in tax revenue for the state, a loss in tax revenue for the federal government."

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