Cigarette tax jumps make smokers suffer

Smokers are sick and tired about all the price increases and tax hikes. They name this situation as unfair and feel deprived even exorcised by the authorities. They are shocked and confused.

Although the federal cigarettes tax is to be increased only after April,1, thousands of customers and retailers have already felt the burden of larger-than-life prices on their wallets.

Mike Bolts, the manager of Red-Hot Convenience shop in Atlantic City, said he has been very much worried about the tax increase going into force on April 1 that would make each pack of cigarette cost 62 cents more expensive than now.

He said that they have already increased the prices for Philip Morris cigarettes by 70 cents, and that increase contributed to a sharp decrease in the sales of this company’s brands since smokers have simply switched to another brands.

Moreover, it is still unknown whether these increased prices already contain the $1.01 federal tax or the price would be increased even more after the new tax enters into effect within two weeks. Many retailers hope Philip Morris has incorporated the federal tax in the new price; however the company has not made any declarations in relation to this situation.

Mr. Bolts said that retailers have been very much disturbed with that situation and with behavior of tobacco industry giant Altria, the owner of Philip Morris Inc.

Despite the fact that cigarette and tobacco sales make up almost 20 percent of Red-Hot Convenience shop total sales, the shop manager is confident that the sales would not fall too much from due to price hikes because those old-time chain smokers would come to buy their favorite cigarettes no matter what. Bolts said that his regular customers told him that they would cut their expenses on something else than cigarettes because lighting up helps them to leave all the problems behind at least for some minutes.

The revenue from the federal cigarette tax increase would go to fund Health Insurance Program for low-income children in accordance with Children’s Health Insurance Program Reauthorization Act, signed into law Feb. 4. The additional Insurance program is expected to cover more than 4 million uninsured children.

Another cigarette industry tycoon, R.J. Reynolds Tobacco raised the price for its key brands like Camel by 44 cents a pack from March 16.

During the press-conference, Howard James, the R.J. Reynolds spokesperson said they have decided to increase prices due to federal tobacco tax increase. However, the new price includes upcoming federal tax.

Spokesperson said that company has been concerned with all the complaints coming from customers, therefore they have lowered the prices for several discount brands, and they also have provided the retailers with additional discounts.

According to the reports of the National Association for Convenience and Petroleum Retailing, cigarette sales comprise a third part of total sales in stores behind petrol and groceries. And the retailers risk loosing up to a half of these cigarette sales, making many small stores go out of business.

Another problem is the difference between the state taxes. Nigel Richardson, the communications manager of a chain of convenience stores across Kansas complained that all these increases on cigarettes would impact dramatically on their stores because people would rather go to neighboring Missouri than buy cigarettes in their shops since the price difference is significant. He underlined that in Kansas state tax on cigarettes is 79 cents comparing to 17 in Missouri that would confirm smokers to hit the road in search of less expensive cigarettes.

Mr. Richardson also said that many of their stores “are going to get killed”, and ore than 100 people would loose their jobs.


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