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CHATTANOOGA, Tenn. -- A double dose of new state taxes hits people buying alcohol and tobacco products today in Tennessee. The so-called "sin taxes" take effect on cigarettes, liquor, wine and beer -- as well as a 1-cent increase in the state sales tax rate.
The changes were included in a record $933-million tax increase package approved this month by the Legislature to balance the budget and end a partial shutdown of state government that furloughed 22,000 workers, the Associated Press reported.
Tennessee's tax on liquor goes up 10 percent, or about 65 cents per gallon, to $4.40. The state sales tax, which is jumping from 6 cents to 7 cents on the dollar, is applied on top of that.
The state's 13 cents-per-pack cigarette tax goes up 7 cents, which combined with the additional sales tax boosts the cost of a typical brand to about $4.21.
According to the research section of the Tennessee Department of Revenue, smokers will pay about 12 cents more for a typical pack of cigarettes. The new taxes on beer amount to an increase of about a nickel for a six-pack.
Scott Shanks, president of L.P. Shanks Co., a product distributor for convenience stores in Tennessee, Georgia and Kentucky, said the new taxes are "nothing more than a price increase for the end user, "adding that he expects tobacco sales to dip slightly.
Sin taxes are a "fact of life in the South," said Larry Carter, president of Carter Distributing. The Chattanooga distributor of Miller and Coors beer products said he would pass on the tax increase to his customers. But he said consumers shouldn't be paying more than an additional nickel unless the retailer is using the tax increase as an opportunity to further increase prices.