Cigarette sellers jump the gun
on
steep federal tax increase
|
Cigarette prices have gone up by more than a dollar a pack in the past two weeks, a price hike that anticipates a 62-cent-a-pack federal tax increase scheduled to go into effect next month.
Local smokers are not exactly thrilled about paying more.
“This just completely fills me with rage,” said Leven Friedrichs, upon learning about the new tax. “For the government to do something like this at a time like now, it’s just beyond me.”
The price for a pack of Marlboros at the Stop-In Food Store in Lexington was $4.99 earlier this week, up from $3.49 two weeks ago. In an interview with the Dallas Morning News, Philip Morris spokesman Bill Phelps said the company raised its prices 71 cents a pack. Phelps said the nine cents in addition to the 62-cent tax increase was to cover costs associated with the increase.
That means Stop-In or its wholesaler, or both, raised their prices 79 cents in addition to 71 cents now charged by Philip Morris. The suppliers for Stop-In would not discuss their wholesale pricing.
President Obama signed the new tax bill into law on Feb. 4. The tax was formerly 39 cents per pack, but the bill raises it to $1.01 a pack.
The tax hike will fund the expansion of the federal Children’s Health Insurance Program, which is expected to extend coverage to an estimated 3.9 million uninsured children nationwide over the next four and a half years, according to a press release from the Senate finance committee. The federal government already insures 6.7 million children through the program.
Phil Welch, a local carpenter who said he has smoked for 30 years, appreciated that the money raised from the tax was going to a good cause.
“If the tax increase is actually going to fund the Children’s Health Insurance Program, I think it’s reasonable,” Welch said as he filled up his tank at the BP gas station. “But I also think it’s a bit rude to attempt to make up other shortfalls with a tax like this.”
Cigarette manufacturers including Altria, the parent company of Philip Morris and the largest U.S. tobacco company, opposed the tax.
“Putting the merits of the CHIP program aside, we don’t think it makes sense to fund important government programs with a revenue source that continues to decline,” Phelps told the Dallas Morning News.
Some smokers said the tax increase would likely change their habits, but none of those interviewed said they were more likely to quit as a result of the higher prices.
“I might smoke a little less,” said Rick Hollister, who has smoked for 12 years. "I am so hooked on the damned thing that they can keep raising the price and I'll probably keep smoking them.”
Bobby Sutton, a cashier at Stop-In, said he had already switched to a lower-priced generic brand.
“A lot of people aren’t willing to do that,” Sutton said. “They’ll just stick to their guns and buy regular. But for the poor guy, you really don’t have any other choice.”
A few local smokers questioned the logic of singling out cigarettes for a tax increase.
“I think if the government is going to pass sin taxes on things, there are a lot of other areas they should be looking into,” said Keary Alderson as he purchased a pack of Camels at Stop-In.
Washington and Lee University law student Megan Westcott had a similar opinion.
“I disagree with the justification for the tax, that cigarettes are unhealthy,” Wescott said after buying a pack of Parliament Lights. “A lot of people have unhealthy lifestyles. I don’t eat fast food, why don’t they tax that?”
Besides questioning the logic of the tax hike, Sutton said that his customers at Stop-In have had different reactions upon learning of the increased tax.
"People have been angered," Sutton said. "Angry with the government, and angry with the fact that they just have to dig deeper. I mean, it's tough all over already for everyone. Everybody has been having to change their style with what's happening to this country right now with inflation and the recession and whatever it is that's going on."
Produced by
Washington and Lee
journalism students.
Lead Supervisors:
Prof. Brian
Richardson
Prof. Indira Somani
Editing supervisor:
Prof. Lisa Tracy
Technical supervisor: Michael Todd