Smokers will have yet another incentive to kick the habit after an April 1 tax increase, and local retailers are bracing themselves for the effects. The federal excise tax will increase for small cigarettes from 39 cents to $1.01 per pack and from $3.90 to $10.07 per carton, according to the U. S. Department of the Treasury's Alcohol and Tobacco Tax and Trade Bureau's Web site.
Jimi Hiley, a tobacconist at Modern Age Tobacco & Gift Shop on West University Avenue, said he doesn't expect to see a large drop in sales because of the increase.
Hiley said he believes raising the price of tobacco is not an effective means of getting people to quit and stop buying tobacco, although some customers have complained.
"It does affect businesses on some level," he said. "I mean some people are saying 'you may have priced me out of my habit.' I think that's a horrible way to get someone to quit."
Nazim Uddin, owner of Gator Tobacco, said sales are expected to drop a little as prices go up, but that he thought it was only going to really affect sales for two to three months.
"People tend to calm down and buy less," he said.
Uddin said he has started to see a trend in which consumers are switching from mainstream brands to off-brands.
Some products, like roll-your-own tobacco, have seen over a 2,000 percent price increase, he said. Roll-your-own tobacco used to be a lower-cost alternative to cigarettes, Hiley said, but now it's going to be just as expensive. The tax will rise from $1.10 per pound to $24.78 per pound of tobacco. Additionally, cigarette papers and cigarette tubes taxes will increase, but by a lesser amount.
Uddin said he buys his cigarettes wholesale from Sam's Club, and they've been charging the tax for two weeks.
While Hiley said he understands the purpose of the tax, he isn't happy that it was placed in the laps of smokers.
The increase was included in the Children's Health Insurance Program Reauthorization Act of 2009 to help provide an additional $31.5 billion over the next 4 1/2 years for health care for uninsured children from low-income families, according to the bureau's Web site.
Hiley said he recently has had trouble finding some brands of tobacco, because other retailers have stockpiled up. This is a bad strategy, he said, because retailers have to pay a floor stocks tax on all merchandise they have for sale on April 1 - even if the merchandise was bought before the tax increase.
"They won't make a profit that way," he said. "It all evens out."
The price of some packs of small cigarettes at Modern Age have already gone up $1, before the April 1 effective date, Hiley said, because some wholesale retailers have gradually raised their prices in the last few weeks to adjust to the new tax rates.
"This is the largest tax increase I've seen," he said.
