Research & Commentary: Weight-Based Smokeless Tobacco Taxes in Wisconsin

Published June 20, 2011

Wisconsin is considering a revenue neutral tax proposal that would change the tax structure for smokeless tobacco from an ad valorem tax to a weight-based tax. This would bring smokeless tobacco taxes in line with the way that other “sin” taxes on alcohol, cigarettes, and gas are applied.
In The Heartland Institute’s testimony before the Texas Ways and Means Committee, Director of Government Relations Trevor Martin noted that, “if you accept the argument that certain products can harm individuals and impose costs on society, and that those products therefore should be taxed to defray those costs—what is called imposing a “sin tax”—there is no justification for taxing similar items differently, solely on the basis of their price.”
He goes on to add that, “The harm caused by a unit of tobacco has no relation to its price. This is why every state and the national government impose taxes based on the number of cigarettes, not on the price of the cigarettes. This is why the states and national government impose taxes on beer, wine, and liquor based on unit, not on price.”
As a matter of sound tax policy states should make sure that taxes are applied in a low and uniform manner.  Moving the state’s smokeless tobacco tax towards a weight-based method of taxation would be a step in that direction.
The following documents offer additional information on smokeless tobacco taxes.
Testimony: Why Taxing Like Products Differently Is Bad
This is a transcript of Director of Government Relations for The Heartland Institute’s Trevor Martin’s 2007 testimony before the Texas House Committee on Ways and Means on the best way to tax smokeless tobacco. He concludes that taxing smokeless tobacco according to weight instead of price is the optimal choice.
States Moving to Weight-Based Taxes on Smokeless Tobacco Products
This article from Budget & Tax News looks at the trend of state’s applying taxes on smokeless tobacco products according to weight. According to the article, “Eight states have gone to a weight-based system for smokeless tobacco since 2005.”
Taxes on Smokeless Tobacco Unfair, Ineffective
In this article from Budget & Tax News, Staff Economist for the Tax Foundation, Gerald Prante explains that, “Regardless of the rationale for the government’s attempt to limit tobacco consumption via taxation–whether through the proper framework of controlling for negative costs imposed on others or through the authoritarian method of trying to control individual decisions–tobacco products should be taxed via a per-unit tax.”

Ten Principles of State Fiscal Policy
This booklet from The Heartland Institute provides policymakers and civic and business leaders a highly condensed, easy-to-read guide to state fiscal policy principles. The principles range from “Above all else: Keep taxes low” to “Protect state employees from politics.”
For further information on this and other topics, visit The Heartland Institute’s Web site at, Heartland’s Budget & Tax News site (http://www./, and PolicyBot (, Heartland’s free online research database.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or The Heartland Institute, contact Government Relations Director John Nothdurft at [email protected] 312/377-4000.