Taxes up in smokes

Published 9:48 am Friday, April 3, 2009

Lighting up isn’t so light anymore on the pocketbook as smokers faced a double-whammy of hikes in the past month.

The federal excise tax on cigarettes officially increased by 61 cents per pack Wednesday to $1.01 per pack. The new revenue will help fund the Children’s Health Insurance Program (CHIP). In addition, major tobacco manufacturers increased prices starting March 1 in expectation of down sales.

On Feb. 4, President Obama signed a bill into law — $32.8 billion to help renew and expand coverage of CHIP from 7 million to 11 million children.

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The cigarettes tax may have increased 61 cents, but “roll your own” tobacco jumped from $1.10 per pound to $24.78 per pound.

At Austin’s BLS Tobacco, where “roll your own” tobacco, bags and tubes are their No. 1 sellers, owner Trisha Reynolds said customers were expecting the hike.

“Everybody was stocking up before,” she said.

According to the Minnesota Adult Tobacco Survey, conducted in 2008, 17 percent of Minnesotans smoke; the smoking rate has decreased about 5 percent since 1999.

Some tobacco retailers have said more customers claim they want to quit as prices continue to climb.

Dave Olson, manager of Apollo Liquors & Superette on West Oakland Avenue, said as brand-name cartons of cigarettes increased to more than $50 per carton, customers tell him they are “trying to quit smoking.”

Cigarettes are a “pretty large portion” of Apollo’s sales, said Olson, who also believes some people are switching to “roll your own” tobacco to save money.

“Nobody had time to stock up,” he added.

Earlier this year, the average retail price per pack of cigarettes was $4.35, with variations due to state taxes and retail business practices, the National Conference of State Legislatures reported. State tobacco tax collections for 2007 totaled $15.26 billion in the 50 states (not counting Washington, D.C. or local government), the organization said. State alcohol beverage taxes totaled $5.1 billion.

As of March, at least 17 states have legislation pending to increase tobacco taxes.

According to the Centers for Disease Control and Prevention, for every 10 percent increase in the price of tobacco, there is a 2 percent decline in adult smoking and 7 percent decrease in youth smoking.

A survey conducted by the independent, non-profit organization ClearWay Minnesota showed that 72 percent of Minnesotans support increasing state tobacco taxes. Thirty-seven percent of respondents said the primary reason for their support is that higher taxes will encourage smokers to quit and prevent kids from becoming smokers; 35 percent cited increased smoking-related health care costs as their primary reason.

Randy Damon, who smokes about a half-pack a day of Virginia Slims, talked about the increase while sitting at The Ville in downtown Austin Thursday night.

He said he doesn’t like the higher cost, but admitted it’s better to increase the tax on cigarettes than other things, like food or even clothing, which Minnesota does not tax.

“Clothing and food are a necessity,” Damon said.