To smoke or not to smoke? Tax takes effect Monday
- Local tobacco retailers are ready for a drop in profits after a $1 tax increase takes effect Monday.
Smokers in York County and across the state will have a decision to make come Monday, when the price of a pack of cigarettes increases by $1 thanks to a tax lawmakers imposed in June to help cover a $1.3 billion revenue package.
The per-pack tax on cigarettes will jump from $1.60 to $2.60, generating about $430 million for the state's spending plan, a deal Gov. Tom Wolf struck with Republicans in the state House and Senate after weeks of not coming together to pass a state budget for fiscal 2016-17, the Associated Press reports.
The state faces mounting deficit issues, and legislators have said the new cigarette tax, as well as other increases, including a tax on internet downloads and possibly allowing and taxing casino-style internet gambling, are necessary to keep the government operating.
For now, smokers and smoke shops will bear the brunt.
Those who don't plan to quit are threatening to take their business over state lines, where the price of a pack or a carton of cigarettes will, as of Monday, be significantly cheaper.
"As of right now it’s helping business; we have a lot of people who are stocking up. But as of Aug. 1 ... (business) is going to take a hit," said Esther D'Ottavio, manager of the Smoker’s Outlet at 1636 W. Market St. in West York.
She said a second tax increase — a 40 percent jump on the cost of loose tobacco,— takes effect in October. Together, the taxes will significantly reduce profits for local tobacco retailers, according to D'Ottavio.
"It’s a huge increase. A lot of people are saying they’re going to quit. A lot of people are going to go over state lines. So where are you going to get your income from?" she asked. "You know, they are depending on this income, and if people aren’t buying, then how are you balancing your budget?"
D'Ottavio knows the majority of her customers by name. She knows how often they come in, she knows what they're there for, and when something changes in their buying habits, she notices. With the new tax, she said she is not so sure how many of them will keep coming back.
Jeff Crouse smoked for 35 years. Then he had a stroke.
Since the stroke, Crouse has switched to e-cigarettes. Now, rather than spending $8 a day on a pack of cigarettes, he has found a more profitable vice.
"I spend it on the lottery," he said.
Crouse doesn't expect everyone to quit smoking overnight, but a lot of people will quit, he said. He suspects that's the true motive behind the dollar increase.
"That’s a hell of a jump. It’s like when my landlord was going to raise my rent $100 bucks, I left. One month’s notice," he said. "That’s an awful big jump. I could see a quarter, 50 cents, but a whole dollar? When they’re doing that, they’re telling you something. They want people to have to quit, and they’re going to hurt the cigarette industry."
D'Ottavio agreed, although she said cigarette smokers might just switch to roll-your-own cigarettes, and those who roll their own now might switch to e-cigarettes. There might be some who do both. But the more likely scenario is that those who don't quit altogether will be more likely to go out of state to find cheaper prices.She said the industry feels targeted.
"Why nobody else? The tobacco industry is always the one that gets hit. How many people smoke? Out of everybody in this state, how many of them smoke?" D'Ottavio asked. "Why are we the ones that have to balance your budget?"