Iowa towns along the Minnesota border have been reaping the benefits of lower cigarette prices due to a new Minnesota tax, but that may soon come to an end. A key piece of legislation that ended the stalemate at the Minnesota State Capitol this year and ended up sending many Minnesota smokers across the border into Iowa to buy cigarettes is being challenged in court. Last week, three tobacco companies announced they would challenge Minnesota’s 75-cent-a- pack health impact fee that went into effect August first. Minnesota Senate Majority Leader Dean Johnson says Minnesota’s 1998 settlement with the tobacco companies barred further state penalties, and the fee appears to violate the agreement. The Iowa Legislature looked at raising the cigarette tax this year, but House Republicans refused to agree with their Senate colleagues to raise the tax 36-cents-a-pack.
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