NationStates Jolt Archive

(CNN) -- Larry Jukes said he remembers when he could buy 10 cigarette packs for $2.50.

But he'd now take the days when -- just last month -- he could buy his carton of choice for $49.

Thanks in part to the largest-ever federal cigarette tax increase -- a nearly 62-cents-a-pack hike that starts Wednesday but was reflected in many prices earlier -- Jukes on Tuesday paid more than $58 for a 10-pack carton at the Cigarette Store in Denver, Colorado.

That same store was selling it about $9 cheaper weeks ago. Jukes and other shoppers there said they feel stuck and taken advantage of.

"They're picking on us poor people, the ones that smoke," Jukes, a 65-year-old who has been smoking since he was a teen, said of the government. "They have been for years."

The cigarette excise tax that tobacco companies must pay the federal government rose Wednesday by 61.6 cents per pack, or $6.16 per carton. The tax now comes to about $10.10 per carton, or $1.01 per pack.

But major tobacco companies began incorporating that increase into their prices to wholesalers in March. And the companies, wholesalers and retailers in many cases gave prices a boost beyond the tax increase, in part to make up for an expected drop in sales caused by the hike, some of them said.

"We don't anticipate another raise for Wednesday. The [March increase in prices] was the raise," said Mary Szarmach, vice president at Colorado-based Cigarette Store Corp., which operates 85 stores in five states. "The manufacturers took what they needed beyond [the tax increase] to maintain their profit margin and take care of what they think will be diminishing sales. ...

"And to maintain gross profit margin, retailers in general tacked on a little, too." Video

If the increase does scare off customers, 83-year-old Gloria Egger isn't likely to be one of them, she said. She said she's upset at the government for raising the tax, but Egger, who has been smoking since she was 18, isn't likely to quit.

"I think it's ridiculous. ... They're picking on smokers," Egger said at the Denver store, where she bought two cartons Tuesday. "I think they're trying to run the tobacco companies out of business.

"As old as I am, I'm not going to quit smoking, regardless of what they do."

Federal taxes also are going up Wednesday on other tobacco products, including cigars. Federal per-cigar taxes, which vary based on weight and price, used to be capped at 4.9 cents but now are capped at 40.26 cents.

The tobacco tax hikes, which President Obama signed into law in February, will be used to finance an expansion of the State Children's Health Insurance Program, or SCHIP. The expansion, which will cost $35 million over five years, is expected to secure federally funded health care for an additional 4 million children.

Before the expansion, SCHIP covered almost 7 million children whose parents earn too much to qualify for Medicaid -- the federal health insurance program for the poor -- but can't afford private insurance.

Dave Bowersox, who bought a box of Prime Time Little Cigars at the Denver store Tuesday, said he's fine with the tobacco tax increases.

"I think tobacco, alcohol, that kind of stuff should be taxed instead of gasoline and food -- things that are necessary for people to survive," Bowersox said.

But near Orlando, Florida, cigar smoker Leah Fuller called the hikes "ridiculous."

"There are [other] things that you could be targeting in the U.S. right now. Why the tobacco industry?" Fuller said. "I, personally, smoke cigars to relax. Why am I being punished for it?"

Jeff Borysiewicz, founder of Orlando-based Corona Cigar Co., said he believed the federal tax hike will cause cigar sales to drop. And he said the increase comes as Florida is considering a $1-per-cigar state tax hike.

Cigarettes, too, have been hit by state excise tax increases. Since January 2002, the average state cigarette tax has increased from 43 cents per pack to $1.21 per pack, according to the Campaign for Tobacco-Free Kids.

A conservative estimate for the average per-pack cigarette price in the U.S., based on data collected from states and territories at the end of 2008 and adjusted for the federal tax increase, is $4.80, the group's Eric Lindblom said.

Tobacco company Philip Morris USA raised list prices for its major brands by about 71 cents per pack last month "in direct response to the tax increase," said Bill Phelps, spokesman for Philip Morris' parent company, Altria.

RJ Reynolds Tobacco Co. on March 16 raised its cigarettes' list prices by 41 to 44 cents per pack and, in many cases, reduced discounts to retailers, basically keeping "our pricing in line with the competition," spokesman David Howard said.

"The federal tax increase was the primary driver," Howard said.

Both companies said they expect a decrease in sales, with Howard noting industry analysts have estimated a drop of 6 percent to 8 percent. One factor in Philip Morris' decision to increase list prices beyond the tax hike was the company's expectation that the new tax level will decrease sales, Phelps said.

Not all U.S. sales declines would be due to smokers quitting, Phelps said.

"Tax increases create an incentive for people to bring cigarettes into the country illegally -- [from places] where they don't have to pay that higher tax," Phelps said.

Nick Hamad, a tobacco store owner in Seattle, Washington, said he thinks the tax will ruin the American tobacco industry.

"If we lose the sales, the state will lose the revenue," he said. "We will be hurt, the state will be hurt and eventually the consumers are being hurt."
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As for Jukes, higher prices probably won't force him to quit smoking, he said.

"I've been smoking about 50 years," Jukes said.


http://www.cnn.com/2009/US/04/01/cigarette.tax/index.html

What a tragedy, the smokers who increase healthcare costs for everyone have to pay a bit more for there vice. That's horrible! If they're going to quit, then clearly they can afford it. Fair to let them share a bit more of the burden of caring for their black lung asses.

Fun fact:

In my home town, it's currently cheaper to get a joint than a cig.

Yes Obama is out to hurt the poor people.

Fuck em. :)

Yes Obama is out to hurt the poor people.

Did you hear Obama's going to tax Tylenol? 'Cause they're white, and they work.


Hahaha.... funny huh? I'm surrounded by fucking rednecks.

It seems that in the UK, smokers contribute more in tax than they take in health services - tobacco products generate roughly £10 billion, whilst smoking related medical treatment costs the NHS roughly £1.5 billion. http://news.bbc.co.uk/1/hi/health/3292979.stm

I dare say that's why we hear so much about how terrible smoking is but it remains legal and accessible.

whats the tax on cigs in the UK ?

whats the tax on cigs in the UK ?

apparently about 77% if you include both excise and VAT.

Edit: it may be higher: http://money.uk.msn.com/tax/articles/article.aspx?cp-documentID=4750489

Did you hear Obama's going to tax Tylenol? 'Cause they're white, and they work.


Hahaha.... funny huh? I'm surrounded by fucking rednecks.

Actually I recievied a text message the other day on a similar joke "The South African government is outlawing panadol reason being is cause they are white and work" He did lie in South Africa for quite a few years and had to put up with things that I take for granted but yeah.

*in before smoking ban debate* :p

What a tragedy, the smokers who increase healthcare costs for everyone have to pay a bit more for there vice. That's horrible! If they're going to quit, then clearly they can afford it. Fair to let them share a bit more of the burden of caring for their black lung asses.

I am a smoker myself and I endorse any kind of rise of the taxes on tobacco. Better to tax tobacco than to tax bread!

btw, from op article:
Jukes on Tuesday paid more than $58 for a 10-pack carton at the Cigarette Store in Denver, Colorado.
Here a 10-pack carton of my cigarettes costs 44 €. This makes 58.56 US$. Wtf is he complaining about anyway?

The tax on fags in the UK is the same amount of money that the NHS get off the government. Ergo smoking heals.

Well, there are more poor smokers than rich smokers, so the tax is regressive, which I'm never much in favor of...but as a smoker, I don't much mind the tax increase, since I ought to smoke less/quit anyways.

What puzzles me is the purpose of the increase...funding the new children's health care program.

Now I'm all for funding children's health care, but I question using tobacco taxes to do it. The higher the tax gets, the more people quit. We want people to quit, because we can reduce health care costs, but if more and more people quit, the tax base will dry up.

Either you'll have to further increase tobacco taxes, which won't work forever, or tie the funding to a new source of revenue.

What source? Nobody seems to know or care, which leads me to believe that the government would rather the number of smokers actually increase, to keep revenue flowing. This is counter to their stated claim, but when was the last time the government wanted a stable revenue source to decrease?

The truth also is that the pharmaceutical firms makes a lot of money selling their so-called "quitting aids" (with their whopping 7% success rate) so any law that pushes people away from tobacco and in to their revenue stream is a good thing...of course, with the goal being for nobody to ever stop smoking but instead to continually relapse and buy their products. This is the same thinking behind their attempts to fight the inevitable emergence of the e-cigarette and other harm-minimizing products; it's highly likely it will be significantly safer than any tobacco product (or antidepressant used to help people "quit" for that matter) and future models will probably be able to deliver a lot of the same experience as tobacco cigarettes. Considering the tobacco product snus has almost no health effects whatsoever (due to the lack of fermentation, most likely), it's not hard to imagine a properly regulated e-cigarette to be any different, if not even safer due to the fact that it's basically nicotine and water.

So, if you remove most of the dangers of smoking or otherwise consuming tobacco, if not all of them, these companies also lose their revenue stream because the only impetus for quitting would be financially motivated, and people are more likely to quit cold turkey (the best long-term successful method) if they can't afford to or don't want to spend money on Nicorette or antidepressants ...naturally, that's an undesirable situation. As a result, they're not only going to force through more taxes on tobacco products but also fight any attempts at harm minimization or elimination even if it would save lives and give people the opportunity to enjoy consuming tobacco (or simply nicotine, if you're in it just for the buzz).

Sad that they put their profits before consumers' health, freedom to enjoy consuming tobacco/nicotine, or tax fairness in our dangerously inequal economy, but that's life. After all, they're not bound to the Hippocratic Oath...

I have a craaaaaazy idea.

1. Eliminate vice taxes
2. Eliminate all tobacco farming subsidies.

I have a craaaaaazy idea.

1. Eliminate vice taxes
2. Eliminate all tobacco farming subsidies.

#2
http://www.openmarket.org/2007/09/18/tobacco-farmers-thrive-without-federal-subsidies/

turns out subsidies were removed 3 years ago. The tobacco farmers made more money once the subsidies were removed.

Methinks cigarette taxes should only be used for medical issues relating to smokers.

whats the tax on cigs in the UK ?
High enough that smokers actually fund the NHS more than they take away from it -_________-

It's like eh... $9 for a pack of cigarettes.

Methinks cigarette taxes should only be used for medical issues relating to smokers.

There would be a huge surplus from taxes then. I'm sure they tax more than is needed by healthcare for smokers.

There would be a huge surplus from taxes then. I'm sure they tax more than is needed by healthcare for smokers.


So the taxes should be lowered.

Well, there are more poor smokers than rich smokers, so the tax is regressive, which I'm never much in favor of...but as a smoker, I don't much mind the tax increase, since I ought to smoke less/quit anyways.

What puzzles me is the purpose of the increase...funding the new children's health care program.

Now I'm all for funding children's health care, but I question using tobacco taxes to do it. The higher the tax gets, the more people quit. We want people to quit, because we can reduce health care costs, but if more and more people quit, the tax base will dry up.

Either you'll have to further increase tobacco taxes, which won't work forever, or tie the funding to a new source of revenue.

What source? Nobody seems to know or care, which leads me to believe that the government would rather the number of smokers actually increase, to keep revenue flowing. This is counter to their stated claim, but when was the last time the government wanted a stable revenue source to decrease?

Smokers are poor? If they were poor they would not be able to afford the cigarettes.

Smokers are poor? If they were poor they would not be able to afford the cigarettes.

Its all about utility. Cigarettes are pretty damn inelastic.

Smokers are poor? If they were poor they would not be able to afford the cigarettes.

they're poor because they bought their cigs. :D

Btw:

http://news.yahoo.com/s/ap/20090402/ap_on_go_co/fda_tobacco

Anti-smoking forces won a long-awaited victory Thursday as the House passed legislation that would give the federal government key controls over the tobacco industry for the first time.

The measure, passed 298-112, gives the Food and Drug Administration authority to regulate — but not ban — cigarettes and other tobacco products.

:)

Btw:

http://news.yahoo.com/s/ap/20090402/ap_on_go_co/fda_tobacco

:)

Philip Morris wins again. I just laugh that people seriously think this move has anything to do with public health...it's meant to lock in PM's market share and extend their power even further. Nothing more, nothing less. Sort of like every piece of tobacco legislation, actually...

Of course, in the end the market will get even. I suggest investing in companies that sell snus and those e-cigarettes. Chances are, this is going to backfire terribly, especially once it becomes clear just what the purpose of this legislation really was. I have a feeling the anti-smoking movement is going to torpedo itself if it continues to demonstrate its subservience to corporate interests; if you really wanted to improve public health, you'd be looking for ways to minimize and eliminate the harm of tobacco while pursuing serious research in to the potential benefits of nicotine, which does have some interesting anti-inflammatory and cholinergenic properties.

Honestly, though, it doesn't affect me too much. I don't smoke much else besides menthols and cigars, and PM won't ever let those go away...personally, though, I'd really rather get one of those e-cigarettes but they're kind of expensive and don't quite deliver the same experience yet.

Philip Morris wins again. I just laugh that people seriously think this move has anything to do with public health...it's meant to lock in PM's market share and extend their power even further. Nothing more, nothing less. Sort of like every piece of tobacco legislation, actually...

Of course, in the end the market will get even. I suggest investing in companies that sell snus and those e-cigarettes. Chances are, this is going to backfire terribly, especially once it becomes clear just what the purpose of this legislation really was. I have a feeling the anti-smoking movement is going to torpedo itself if it continues to demonstrate its subservience to corporate interests; if you really wanted to improve public health, you'd be looking for ways to minimize and eliminate the harm of tobacco while pursuing serious research in to the potential benefits of nicotine, which does have some interesting anti-inflammatory and cholinergenic properties.

Honestly, though, it doesn't affect me too much. I don't smoke much else besides menthols and cigars, and PM won't ever let those go away...personally, though, I'd really rather get one of those e-cigarettes but they're kind of expensive and don't quite deliver the same experience yet.

It is kind of disturbing that Phillip Morris approves of the plan. But I can't quite figure out how regulation would work to their advantage.

they're poor because they bought their cigs. :D

Yah. The main reason why I'm considering quitting is that I would be richer by about 1200 €/year if I did.

Methinks cigarette taxes should only be used for medical issues relating to smokers.

From what I understand it's being used to fund medical issues relating to children. SCHIP.

Screw the smokers. I wish they had increased the tax by its triple.

Screw the smokers. I wish they had increased the tax by its triple.

Why bother with the tax at all. How about an outright ban if it's costing so much in health care dollars?

Cigarettes are one of the three things that make money in the USA. From what I know, the other two are video games and porn. Of course they are going to increase the taxes on the big three, more taxes = more money.

It is kind of disturbing that Phillip Morris approves of the plan. But I can't quite figure out how regulation would work to their advantage.

It wouldn't, unless you believe in the conspiracy that says that the FDA actively attempts to get people to smoke so pharmaceutical companies can sell antidepressants and nicotine patches. You can tell the conspiracy is true because the FDA never banned cigarettes.

Screw the smokers. I wish they had increased the tax by its triple.

Which would cause cigarettes to be smuggled-in by the boatload. Brilliant.

Why bother with the tax at all. How about an outright ban if it's costing so much in health care dollars?

Ban alcohol while you are considering.

It wouldn't, unless you believe in the conspiracy that says that the FDA actively attempts to get people to smoke so pharmaceutical companies can sell antidepressants and nicotine patches. You can tell the conspiracy is true because the FDA never banned cigarettes.

Nah, it's a lot simpler than that. It's not even that nefarious...it just shows that they know exactly how to play the antismoking movement to guarantee continued growth. They're pretty sharp when it comes to keeping business going.

It's sort of like how they supported the recent increase in tobacco taxes; sure, their primary products might take a dent but included in that tax is a massive hike on roll-your-own products that makes them utterly uncompetitive with PM's products. PM doesn't really do a whole lot of RYO business (if any), so destroying that market pushes more people towards them and away from their competitors, especially RJ Reynolds with its RYO product line. Most importantly, Philip Morris manufactures only menthol and unflavored cigarettes, and it's likely that FDA regulation would lead to banning other flavors and additives (especially cloves) so they see this as a good way of locking in their market share and preventing foreign competition. Particularly, clove cigarettes have gotten a lot more popular in recent years and naturally they pose a threat to their established market share. The bitching about snus and the e-cigarette recently have also been motivated by the same goal of capturing the market. In addition, FDA regulation would likely tangle up imports, little cigars, and other competing products further lessening the real competition again PM, who dominate the conventional cigarette market.

Really, there's no conspiracy. It's a simple, well-played move to dominate the tobacco market; a somewhat smaller pie doesn't mean a whole lot if your share of it is a lot bigger. Now, the question is whether or not they're going to brush up against anti-trust laws as the effects of these policies sink in...

Why bother with the tax at all. How about an outright ban if it's costing so much in health care dollars?

I think the problem isn't with tobacco, it's with the atrociously high cost of health care in this country. If healthcare were cheaper, we wouldn't need as high of taxes to cover the cost...attempting to cover that shortfall through higher taxes basically gives companies a legitimate basis to continue bilking consumers out of huge sums of money.

Of course, there would also be smuggling...smuggling cigarettes to avoid taxes can generate gigantic sums of money, both for the people doing it and for the countries that charge lower prices.

I always have to pick the most expensive vices. Why couldn't I have become a stoned sex addict instead of a cigarette-smoking drunkard?

I always have to pick the most expensive vices. Why couldn't I have become a stoned sex addict instead of a cigarette-smoking drunkard?

Depending on how unattractive you are, that can be very expensive.

Depending on how unattractive you are, that can be very expensive.

Do you have to pay tax on it though?!

Ban alcohol while you are considering.

After tobacco, what do you think is going to be next?

Everything that doesn't fit the Cult of Healthy Living (whose reward seems to consist primarily of getting Alzheimer's...) is going to be attacked as government attempts to force a "healthy lifestyle" on people regardless of happiness, individual freedom, or economic reality. Truth is, unless somebody finds a way to cure aging itself, the vast majority of us are going to bite it between 70-80 no matter how much we run or diet or anything else. Of course, you could be like Kurt Vonnegut, 2-pack a day smoker who lived to be 84 and died of a completely unrelated cause, or Frank Sinatra, who made it to 82 despite heavy drinking and smoking...

Hell, even Hunter S. Thompson made it to 67 and he killed himself...if he can do it, anybody can.

Do you have to pay tax on it though?!

Not any more than you have to pay on smuggled cigarettes.

Screw the smokers. I wish they had increased the tax by its triple.

They should do the same to alcohol while they're at it.

High enough that smokers actually fund the NHS more than they take away from it -_________-

It's like eh... $9 for a pack of cigarettes.

damn. worse then the US. I think we are just around $7 per with the new tax.

I am a smoker myself and I endorse any kind of rise of the taxes on tobacco. Better to tax tobacco than to tax bread!

btw, from op article:

Here a 10-pack carton of my cigarettes costs 44 €. This makes 58.56 US$. Wtf is he complaining about anyway?

Seriously. We were around $50-60 for a carton about a year ago. With recent federal, state, and local tax increases, it is now around $90 for a carton (in Boston, smokers pay more in tax than we do for the product itself). A pack of Camel or Marlboro (by far the two most popular brands around here) are $9.50 or so. The cheapest I can find are around $5.50 (Maverick, Basic, and Gold Coast), or about what Camels used to sell for a year or two ago.

Looks like it really is time to quit.

I should mention that I, too, support the raises in cigarette taxes.

Fuck em. :)

I'd rather not. They'd taste nasty.

What are you Americans complaining about? Here, I don't think they even sell 10 pack cartons, and a carton of 5 packs costs around $60-70, sometimes more depending on brand.

I'd rather not. They'd taste nasty.

I'm pretty sure LG wasn't suggesting a nice romantic Barry White bottle of wine fireplace type of fucking where there would be any kissing on the mouth. I think he was more going for the prison "oops, I dropped the soap" kinda fucking.

Smokers are poor? If they were poor they would not be able to afford the cigarettes.

*facepalm*

I'm pretty sure LG wasn't suggesting a nice romantic Barry White bottle of wine fireplace type of fucking where there would be any kissing on the mouth. I think he was more going for the prison "oops, I dropped the soap" kinda fucking.

Can't it be both?

Seriously. We were around $50-60 for a carton about a year ago. With recent federal, state, and local tax increases, it is now around $90 for a carton (in Boston, smokers pay more in tax than we do for the product itself). A pack of Camel or Marlboro (by far the two most popular brands around here) are $9.50 or so.
Here in Italy also we pay more in taxes on cigs than on the product itself. The price for a 20-pack of Marlboro has risen from 5000 lire in 1999 (2.58€) to today's 4.40€ (more or less 5.80 US$).
Cheapest being Nazionali, MS, Esportazione at 3.50€ iirc.