Tax on tobacco goes up
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Cigarettes are on sale in New York. The new taxes are meant to increase funding for the federal State Children’s Health Insurance Program.
Each day Mark Baylor sits downtown rolling cigarettes from tobacco, then takes some deep puffs from his self-made smokes.
But a massive federal tobacco tax slated to take effect today may finally force Baylor to kick his 20-year habit.
“I’ve stocked up in advance though,” Baylor, 45, said Tuesday. “I like smoking.”
Baylor, like many smokers, has been stockpiling tobacco — he’s bought several pounds of rolling tobacco in anticipation of the tax that will make his habit much more expensive.
The new taxes, meant to increase funding for the federal State Children’s Health Insurance Program, are rising dramatically. Now, federal taxes on a packet of rolling tobacco will be about $1 instead of 4.5 cents.
Taxes on cigarettes also will go to a little over $1 from the current tax of 39 cents. Chewing tobacco will be taxed at 11.3 cents per can instead of the previous 4.4 cents.
That’s all on top of existing state taxes — in Texas, $1.41 per cigarette pack for the last two years.
$7 a pack
A typical pack of cigarettes will cost about $7 in Texas after the tax takes effect. As of today a pound of rolling tobacco will cost $60 instead of the current $15.99 at Tobacco Outlet in West Houston.
Houston tobacco shop owners say they are worried the tax increases could drive them out of business.
Previous taxes and restrictions on smoking have eaten into profits at Richmond Avenue Cigar
on Fondren Road in West Houston.
Owner Lynn Goodwin said sales fell 30 percent after a local 2007 ordinance banned smoking in many public places. She’s expecting a bigger hit in the coming months.
In the past few days, however, sales have spiked slightly as customers stock up before the tax is implemented.
“I’ve had five people ask me this morning alone whether we were taxing yet,” Goodwin said Tuesday. “Everyone’s trying to beat it.”
Cigar Emporium on South Shepherd has also seen a small increase in sales recently. But manager Van Thai said he’s worried that many of his customers aren’t aware of the tax.
“We’ve put up signs, but a lot of people just don’t know,” Thai said.
Paradoxically, some tobacco dealers think the tax increase could help business.
Maybe a new brand?
Andy Norris. who markets a line of lower-priced cigarettes to retailers, said increased prices could drive consumers to his Seneca brand — but will likely drive the sellers of rolling tobacco out of business.
In the past many smokers have been drawn to rolling tobacco because it has been cheaper than regular cigarettes.
Anti-smoking activists hope the new taxes will encourage people to quit smoking.
The Campaign for Tobacco-Free Kids estimates that more than 150,000 children will not start smoking and nearly 75,000 adults will stop smoking in Texas because of the rising prices.
“This is probably the most effective way to reduce consumption and more importantly stop kids from ever starting to smoke,” said James Gray of the American Cancer Society in Texas. “We know what will happen based on similar tax increases before. And it will be positive.”