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Cigarette tax hike drives customers to stores
June 2, 2005
Will increase to 30 cents per pack today
Smoking cigarettes just got more expensive.
Today, Kentucky implements an increase in cigarette tax raising the current rate from 3 cents per pack to 30 cents per pack. The increase was approved by the General Assembly in March as part of Gov. Ernie Fletcher's tax modernization plan.
To save money before the increased cigarette tax goes into effect, smokers throughout Nelson County filed into stores Tuesday to buy cigarettes.
"We've been busy since Friday," Gina Hawthorne, of Tobacco Patch, said. "We're way busier than normal."
The Tobacco Patch, on John Rowan Boulevard, specializes in tobacco products. Customers have been buying five, 10 or 15 cartons at a time, Hawthorne said.
On Friday, according to Reba French, who co-owns the store with husband Dave, business generated about $2,000 more than normal.
Customers have been stocking up on cigarettes for months, she said, with many freezing them to keep them fresh.
That stockpiling will likely cause a drop in sales in the first few weeks after the increase, French believes.
"I feel like it will slow down somewhat, but in a couple of months, it will be back to normal," she said. "It's just like the gas prices, it never kept anybody at home."
Many customers have told French the increase means they'll try to stop smoking. Others, she thinks, will try a lower-priced cigarette.
Hawthorne, a smoker, doesn't plan to let the increase affect her smoking habit.
"I'm a smoker," she said. "I'm going to continue to buy them regardless."
Across town at Bo's Smoke Shop on Bloomfield Road, cashier Joanie Greenwell said the store was busy Tuesday.
"Usually if (customers) come in and buy one carton, they'll buy two," she said. "It's like doubling everything."
The increase, she suspects, will likely slow business.
"I don't like it, but there is nothing I can do about it." Greenwell, a smoker, said.
Anya Scott, an employee of Speedy's (formerly Tobacco Road) keeps saying she'll quit smoking every time prices are raised.
"I remember when they were $2.50," she said. "People aren't going to be able to afford them."
State Sen. Dan Kelly, R-Springfield, supported the increase as part of an overall tax modernization plan.
"When you do tax modernization, if you're going to lower some taxes and raise some others ... the cigarette tax is obviously one you would consider adjusting."
Before the increase, at 3 cents per pack, Kentucky had the lowest cigarette tax in America.
"In Kentucky, we adjusted it up and still kept it lower than surrounding states and the national average," Kelly said.
As of February, according to "50 State Comparisons" put out by the Taxpayers Network, Indiana's per pack tax is 55.5 cents, Tennessee is 20 cents and Ohio is 55 cents.
Some proponents of the tax proposed the state make the rate as high as 75 cents per pack to potentially curb underage tobacco usage.
"We think it would have just promoted the use of smuggled and contraband cigarettes," Kelly said, pointing out a similar situation in New York where the tax rate is $1.50 per pack. Although overall sales dropped by half, he said, contraband and smuggled-cigarette use increased.
"It doesn't necessarily stop the health concerns; it promotes contraband cigarettes," he said.
As part of the tax modernization package, the increase is part of a sound tax policy, Kelly said.
"We raised it to a rate that is still lower than other surrounding states, but provides a little additional revenue," he said, adding that most Kentuckians will have a lower tax burden because of changes in the income tax structure.
State Rep. David Floyd, R-Bardstown, opposed the cigarette tax increase.
"I opposed the tax increase in cigarettes because, in general, I'm opposed to increasing taxes," he said. "I'll continue to fight against anymore increases in that tax."
The state has enough tax revenue, Floyd added; it just needs to be spent better.
For those who supported the tax increase as a way to lessen kids smoking, Floyd doesn't think it's the reason the tax was raised.
"The real reason to raise the tax was to raise revenue. That's what it will do," he said. "It was part of the overall tax modernization plan and the plan hopefully is going to work in the way it's designed so we can fund those things that need to be funded."
In Kentucky, where about 30 percent of the state's adults smoke, in 1998 tobacco-related illnesses cost more than $1 billion in medical expenses, according to the Center for Disease Control and
Tonda Luckett, director of the Community Prevention Center, hopes the tax increase will deter young people from smoking.
That's particularly important in Nelson County, she said, where surveys have indicated youth smoking is above the state and national average.
"Research has shown (the tax increase) decreases the use, which we're in support of," she said.
Luckett hopes lower usage will be seen immediately. In fall 2006, the Community Prevention Center will do another alcohol and drug survey at area schools.
"We'll be able to see if there is a reduction," she said. "I suspect there will be. We hope it will reduce youth usage and save lives in the long run."
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