Cigarette prices rise $1 a pack

Like a smoke ring floating up to the ceiling of a dimly lit bar, cigarette prices continue to rise.

Today, the state’s $1-a-pack tax increase, which passed unanimously in the Florida Senate and by a nearly a three-to-one margin in the state House, takes effect.

It is the first increase in Florida’s cigarette tax since 1990 and moves the state’s per-pack tax from 33.9 cents – 46th highest in the country – to $1.33.9, which ranks 22nd nationwide.

Coupled with the 62-cents-a-pack increase in the federal cigarette tax that took effect April 1, cigarette prices in the state have shot up $1.62 a pack in three months. State and federal taxes now account for approximately $2.35 of the cost of each pack of cigarettes.

The increase has some retailers somewhere between nervousness and anger, some smokers pledging to quit, others feeling unfairly singled out and a government watchdog group talking of bad tax policy.

When Gov. Charlie Crist signed the cigarette tax bill into law in late May, he said it was, to him, a pro-health issue, not a tax issue, because taxing cigarettes might encourage people to quit an unhealthy addiction.

Having a beer on the patio outside Lilllian’s Music Store in Gainesville this week, Gainesville resident Nick Elliott said that, if the argument of “using taxes to adjust behavior” is sound, then taxes on fast food, soda and potato chips should all be increased because indulgence in those items can lead to health problems.

“Taxes are a means of generating revenue, not correcting behavior,” Elliott said.

The state faced a multi-billion-dollar budget shortfall until federal stimulus money arrived. Against that backdrop, tobacco users, with the exception of cigar smokers who will not see a tax increase, were one of the few groups that the Legislature and Crist had the appetite to raise taxes or fees on during the last session.

For that reason, Nick Carter, 21, of Gainesville said he and other smokers were “unfairly singled out” as a group the state could use to raise revenue.

Carter’s friend Kari McCown, 20, a Santa Fe College student, said the two tax hikes on the heels of one another have not curbed her smoking yet, but, if prices “got ridiculous,” she might try to quit.

Johnny Thompson, spokesman for the Marion County Health Department, said that, as the price of cigarettes has gone up, there has been a noticeable increase in callers seeking information on smoking cessation classes. Jermaine Thompson, who runs the smoking cessation classes for the Alachua County Health Department, said there are not more people enrolling … yet. While the classes are not growing, more people in the classes are saying they want to quit because of the rising price, he said.

The state projects that the tobacco tax hike will raise $886 million for Medicaid in 2009-10 and $934 million for the program in 2010-11. The state says nearly 29,000 people a year in Florida die of smoking-related illnesses, and smoking-related costs are $1.25 billion a year for Medicaid, the health-care program for low-income residents.

Robert Weissert, director of communications for Florida Taxwatch, said his organization feels the cigarette tax increase is bad policy for multiple reasons. First, Weissert said, state officials are funding programs, primarily Medicaid, with a revenue source they fully expect to decline as cigarette sales drop off because of the tax increase.

Studies, including a 2007 report from the Centers for Disease Control, found that smoking is far more prevalent among people living below the poverty line.

“This is really the most regressive tax that is possible.” Weissert said. “You are raising revenue on the backs of those who can least afford it.”

Retailers, meanwhile, say the tax increases and the federal tobacco regulations that President Obama signed, which ban the sale of candy and fruit-flavored cigarettes and cigars but did not regulate menthol cigarettes, will have some stores struggling.

“In 20 years of business, I’ve never seen this much of a hike,” said Andy Patel, owner of Ashok Smoker Outlet & Grocery on Southeast Maricamp Road in Ocala. “People are going crazy. They think I’m doing it. They think I’m price gouging.”

Mike Patel, owner of A&L Discount Beverage on East Silver Springs Boulevard in Ocala, said cigarette sales are a large segment of sales for all convenience stores and he expects the next few months will show a decline in sales.

“It’s going to hurt the retail industry,” he said. “Everybody’s going to suffer.”

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