Tobacco sales down in wake of new tax

Cigarette sales have plunged, and smokers have been streaming across the border since Florida’s $1-a-pack tax went into effect July 1.

The latest figures from the Department of Business and Professional Regulation show a 28-percent drop in the sale of cigarette packs from July 2008 to July 2009 — 76.8 million packs sold this year compared to 106.6 million packs a year ago.

Sales are also down from June, the month before the buck-a-pack increase was added, 17 percent less in July than June, when 92.9 million packs were sold.

The state’s convenience stores, where most cigarettes are sold, and where tobacco makes up 34 percent of non-gasoline sales, are already feeling the sting, said Jim Smith, head of the Florida Petroleum Marketers and Convenience Store Association.

Some owners are working longer hours behind the counter and cutting employee hours to make ends meet, Smith said. Layoffs are inevitable, he said.

“Indeed, my members in the northern part of the state have seen reduced sales of 30 percent,” he said. “You are going to see layoffs. I think that’s going to come. Sooner or later, something’s got to give.”

But Florida’s loss has also been Georgia’s gain.

A 15-minute drive from Tallahassee, and a few miles north of the Georgia line, Florida smokers have been crowding the parking lot at Huds III convenience store and Texaco station in tiny Beachton, where cartons of premium cigarettes are $8 to $12 cheaper.

“Man, it’s been like a rocket,” said manager Roy Simmons. “Hopefully, it will get even better now that the college kids are back in town and they get wind of it. The football games are going to start soon, too.”

Simmons declined to give dollar figures, but he said weekly carton sales have zoomed from 150 to 800 since the beginning of July.

$900 million lure

He’s not the only one smiling.

Health advocates, who have been championing tobacco-tax increases for years, are thrilled.

“This is going to help us achieve our goal and help me work myself out of a job,” said Emily W. Read, communications director for the American Heart Association’s Greater Southeast Affiliate in Tallahassee.

The advocates point to studies, including a 1998 market analysis by Credit Suisse First Boston Corp., that show that for every 10-percent increase in price, overall smoking declines by 4 percent. Tobacco use among kids drops 7 percent, the advocates claim.

Before July, Florida taxed cigarettes at 34 cents a pack, well below the national average of $1.19. Florida was also one of only six states that hadn’t raised cigarette taxes in 10 years.

But the promise of $900 million a year in new state revenue proved too tempting for even the staunchest anti-tax conservatives who were scrambling to fill a $7 billion budget hole.

“I’m not sure how much you can tell from one month, but it is certainly encouraging that immediately after the bill took effect, we saw a decrease in the numbers,” said Sen. Ted Deutch, D-Boca Raton, the bill’s sponsor. “This has always been a public-health bill. I think the economic reality helped convince my colleagues how important a health issue it really is.”

Web-sales crackdown

To make sure that Florida squeezes as much revenue as possible out of the new tax, lawmakers for the first time ordered regulators to begin tracking down Internet tobacco sales. Department of Business and Professional Regulation press secretary Alexis Antonacci Lambert said administrators are hiring seven people to begin the hunt, but she declined to say what strategy the state will use.

“The goal of our investigators is to bring everyone into compliance,” she said.

Lambert said the department is not aware of increased smuggling activity or truck hijackings.

Jerry McDaniel, Gov. Charlie Crist’s budget chief, said he was studying the numbers. It’s too early to determine if the new tax will hit the projected revenue mark, he said. Amy Baker, the Legislature’s chief economic forecaster, said the picture will be in sharper focus in the fall.

House budget chief Rep. David Rivera, R-Miami, summed up the ambivalence conservatives feel about the issue.

“Number one, I’m glad that fewer people are smoking,” he said. “But then, there’s the money. I guess I would rather have healthier people.”


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