Jacksonville resident Sheris Fogarty enjoyed one of her last Marlboro Lights on the Fourth of July. Between the $1.34 per pack state tax increase that went into effect July 1 and rising health concerns, Fogarty has decided her days of smoking have come to an end.
“I have been meaning to quit for years but the tax increase was the last straw,” she said. “I will not pay $5 a pack.”
Many smokers, like Fogarty, have become quite bitter over recent state and federal tax increases. The state legislature, in a move to balance the budget, increased taxes more than 290 percent per pack. This following the April 1 federal tax increase of a 159 percent per pack. Even tobacco companies raised prices in anticipation for the tax increases, due to an expectation of a loss in profits long-term.
But a lot of people aren’t quitting alone as membership for Quit Smoking Now, a smoking cessation program, is on the rise.
“People are getting more conscience about their money,” said Karen Nutter, lead tobacco cessation specialist. “People have been openly talking about the tax increase as their reason for quitting in the group sessions. Plus our phones have been ringing off the hook lately.”
In many cases, a pack of cigarettes can now cost more than $5. Before federal and state legislation was enacted, most name brand cigarettes could be purchased for around $3.50.
The legislation is expected to generate an additional $900 million a year in state revenue. The tax increase comes on the heels of a report released by the Office of Economic and Demographic Research for the state legislature that said revenue from cigarette taxes has surpassed the estimates by 4 percent and is $1.3 million over expectations.
However, most state legislators like Sen. Stephen Wise, R-Jacksonville, support the tax hike for reasons other than revenue generation.
“I favored the bill because of the health aspect more so than as a way to create revenue,” Wise said. “If we stop some youngster from smoking, we will stop heartbreak later on in their lives.”
Wise has personally witnessed the consequences of long-term smoking.
“My brother died about three years ago from lung cancer. He smoked like a chimney,” he said. “We tried for years and years [to get him to quit], and I watched him die. It was not a pretty sight.”
The new law will generate money, but whether that new revenue will be allocated to health care programs remains to be seen, Wise said. Over time, though, the amount of revenue will inevitably decline due to fewer people smoking, he said.
“I hope [the revenue] will go into the general fund and will then be allocated to health care spending and programs that will help influence young people not to smoke,” he said, “Although, no discussion has been started about what will supplant the cigarette tax when the revenue begins to trend down.”
That is why tax opponents like Grover Norquist, president of Americans for Tax Reform, advocate substitution methods over outright taxation.
“If you want to raise cigarette taxes by a $100 million, for instance, then cut the sales tax by the same amount,” Norquist said. “Then politicians have what they say they want: A method to discourage use by low-income users while assuaging the concerns of people worried about the eventual tax burden.”
But he said politicians are interested in the income generating aspect, regardless of their health concerns.
“The bottom line is you have legislatures who want to raise money. They don’t want to govern and rein in spending. They just want to raise more money,” he said.
Because the tax increase occurs during a recession, many convenient store owners are worried the new tax will continue to keep people out of their shops.
“People use to buy several cartons of cigarettes at a time, now business is even slower than it has been,” said Jim Safar, manager of Norman’s Food Store. “Customers have also cut down on the amount they are smoking and are even opting for some of the cheaper brands now.”
The tax has hurt convenient stores and “quicky marts” the hardest, because unlike gas stations, their primary goods are cigarettes and beer, which has also increased in price, Safar said.
“People use to come in and buy beer and cigarettes and spend $7 or $8, now it costs them $12 to $15, and people just aren’t doing it as much anymore,” he said. “This is Jacksonville, not New York or Washington. People are not use to expensive cigarettes.”
However, this type of legislation might only be the first of many as Wise also endorses rate hikes for other products, like alcohol as well.
“I wouldn’t have a problem raising malt liquor taxes to use those dollars to help people gain employment,” he said. “I think alcohol is as bad or worse than tobacco.”
But Safar contends it is not a good idea to raise taxes in a recession.
“This is a bad time to be raising prices, the economy is already bad and with the level of unemployed, [this move] will only continue to hurt businesses,” Safar said.
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