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Hernando Today

Tobacco Users Must Burn More Money To Smoke, Chew

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By TONY HOLT

Hernando Today

Published: April 2, 2009

SPRING HILL - Julie Spitzer dug into her purse Wednesday morning and pulled out exact change for a pack of her favorite cigarettes.

She was about 60 cents short.

"Oh that's right," she said as she cocked her head back and chuckled. "I didn't realize that was today."

The costs of tobacco products shot upward Wednesday when the federal tax hike went into effect. Philip Morris and other companies tried to subvert the "sticker shock" by raising prices three weeks ago, but tobacco customers were still reeling from the government's decision to target them.

At least that's how they see it.

As Spitzer carried her toddler in one arm and stuffed the pack of smokes into her pocket with the other hand, she recalled a recent conversation she had with a friend.

"She has to quit smoking," Spitzer said. "That's what her husband told her ... He will not pay for her cigarettes anymore with these prices."

Store owners that heavily rely on cigarette sales also are unhappy with the latest price surge.

"It's going to drastically hurt me and my business," said Harry Patel, the owner of A&H Discount Beverage, located near the entrance to Brookridge. "The majority of my sales are in cigarettes. When people come in here and buy cigarettes, they usually buy something else, too. All of my sales will go down."

The federal tax on a pack of cigarettes nearly tripled, from 39 cents per pack to $1.01.

For a 10-pack carton, the tax jumped from $3.90 to $10.06.

The increased excise taxes on tobacco were part of the Children's Health Insurance Program Reauthorization Act, which was signed into law by President Obama in the weeks following his inauguration.

The money collected from the taxes will go toward expanding health benefits for children.

"I think I'm going to quit," said Doug Sharp of Weeki Wachee. "If it helps the government and if it helps me quit, I'm all for it."

Many on fixed incomes turned to roll-your-own cigarettes because the loose tobacco and paper were cheaper than the filtered brands.

Since Wednesday, those customers have seen some of the steepest price hikes.

The taxes on loose tobacco went from $1.09 per pound to $24.78.

At Tobacco Depot in Spring Hill, a one-pound bag of tobacco was $18 last week. As of Wednesday, it jumped to $60.

"People who are on fixed incomes can't afford those products anymore," said Tobacco Depot manager Brenda Cash.

For small cigars, the taxes went up from $1.82 per 1,000 to $50.33. For larger cigars, taxes went up from 5 cents to nearly 40 cents per stogie.

Cash thinks her business will suffer declines soon as a result of the tax hikes. Cigars are not only for rich businessmen, she said. The working class makes up the engine that drives the industry.

"It's really not your high-end people who smoke cigars," Cash said. "These are blue collar people ... This is what they do for enjoyment."

David Sutton, a spokesman for Philip Morris USA out of Richmond, Va., called the latest excise taxes "very, very regressive" and "unfair from a public policy practice."

He also considered it an unreliable revenue stream. Since 2003, there have been 57 state-imposed tobacco tax increases and only 16 of them met revenue projections, Sutton said.

The federal government is projecting $35 billion during the next several years.

Consumers shop based on prices and they will make concerted efforts to avoid higher taxes. They might cross state borders, order online or purchase tobacco at Indian reservations, Sutton said.

The Bureau of Alcohol, Tobacco, Firearms and Explosives also has stated that the cigarette-smuggling business grows after every excise tax increase.

Reporter Tony Holt can be reached at 352-544-5283 or wholt@hernandotoday.com.

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