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What seems like a cruel April Fool’s Day prank for smokers is actually a harsh reality today as the single largest federal tobacco tax increase ever has combined with a state tobacco tax hike to send prices skyrocketing.
The federal tax on a pack of cigarettes jumped 62 cents today, and the state tax doubled from 30 cents to 60 cents.
The result is a 92-cent increase per pack, which translates to cartons of cigarettes costing around $10 more in the Commonwealth.
The money raised from the federal tax is supposed to help fund expansion of health insurance for children, and the state tax increase aims to help balance a budget shortfall.
To avoid their own budget shortfalls, Philip Morris and other major cigarette companies reacted to the possibility of lost profits by going ahead and upping their prices a couple weeks ago in preparation of today’s tax increase.
The decision hasn’t gone unnoticed among tobacco users in Shelby County.
As both a smoker and a daughter of a tobacco farmer, Tammy Boyd, a clerk at It’s Convenient No. 40 in Shelbyville, said she isn’t happy about the higher tobacco prices.
“I just think it’s a bad deal because people are going to miss out on spending money on important things to spend it on cigarettes,” she said.
Boyd said she has smoked for 20 years, and like others she has thought about quitting the habit but said it isn’t easy. She said she worries about young people with kids using their money on their addiction instead of for more important things.
On another level, the higher taxes directly harm the livelihood of tobacco farmers such as her father Charles, who has seen his crop from 20 acres down to 12.
“You don’t plant and grow as much because you aren’t going to sell as much,” she explained.
But smokers and farmers aren’t the only ones affected. Convenient store co-owner Ruth Hodge said tobacco product sales are down in her store, and it’s hard to say if they’ll come back up with the economy in turmoil.
“It’s a horrible time for the government to raise taxes,” she said. “People can’t believe prices are that high.”
Another problem she said she could foresee in other stores is that they may not carry as many brands as they normally would because of the high prices, thereby limiting the availability of certain products and losing those products’ customers.
Falling sales are also a painful truth for the local Cox's Smokers Outlet.
“Sales are going to drastically decline,” Cox’s Smokers manager Ray Feinberg said.
Feinberg said his customers can’t believe the price of cigarettes, and many say they’re going to switch to roll-your-own cigarettes. However, under the tobacco tax increase all tobacco products are affected.
“Roll-your-own increased $24 per pound – that’s from around $17 to $41 – and people can’t afford that either,” he said.
To try to offset lost sales, he said many of the Cox’s stores have applied for a liquor license to be able to offer liquor and wine, in addition to the beer it already stocks.
“It’s getting bad out here,” he said.