The federal tobacco tax hike went into effect on 1 April, significantly raising the price of tobacco products to fund a federal children's health insurance plan.

The increase raises the so-called ‘sin tax’ from USD 0.39 to USD 1.01 (EUR 0.29 to 0.76) and applies to all tobacco products. Money from the tax — an estimated USD 32.8 billion — will go to the State Children's Health Insurance Program, known as SCHIP, to extend health care coverage to 4 million uninsured children.
Congress had passed legislation in 2008 which would have raised the tobacco tax to fund the programme, but then-President George W. Bush vetoed it. However, President Obama signed a new version of the legislation in February.
In addition to the federal tax hike, more than two dozen cash-strapped states are considering ways to boost their own tobacco taxes this year. (pi)