Over the past several years of New Jersey’ increased state and federal taxes a great number of smokers have turned to less-taxed smoking products.
New Jersey implemented a $2.70 tax per cigarette package, and the federal government has established a $1.01 excise tax two years ago.
“The six highest tobacco taxes in the country may discourage many smokers from this hazardous habit and others from starting lighting up,” said Karen Blumenfeld, executive director of Global Advisors on Smokefree Policy.
New Jersey gathered about $742 million in cigarette taxes in 2010. That figure was a 4% decrease, $33.1 million less in comparison to 2008 data.
However the profit from other cigarette products as cigars, chewing tobacco, hookah tobacco and roll-your-own cigarettes increased by 26% in that time, producing $3.7 million more from lower tax rates.
The state has a stipulated wholesale tax on all tobacco products that is 30% of the price the retailer pays the manufacturer.
“If I had to purchase cigarettes for seven or eight dollars, I would think about quitting,” said Schubiger, 52, who bought a 10-pack of little cigars for $22. Had they been cigarettes, he would have paid nearly $75.
“Price is a significant thing; plus I like them very much,” he said.
New Jersey government proposed to tax little cigars the same as regular cigarettes.
“The additional tax will make the little cigars so attractive to present smokers looking for a cheaper alternative,” said Schubiger.
The Office of Legislative Services declared that the bill would raise tax revenue $6 million to approximately $9 million. According to statistics more than 5 million packages of little cigars were sold in 2010.
However increasing taxes will not make people stop smoking, the future increases may affect New Jersey businesses.
A tobacco store that is owned by Melchiondo sells cigars, hookah tobacco, cigarettes, little cigars and roll-your-own tobacco.
“Whether cigarettes are sold for $2 a pack or $8, people will continue to smoke, that will put some weight on the roll-your-own market if that is not taxed any more. The little cigar smokers may switch to roll-your-own,” he said.
Nearly 3.6 billion fewer cigarettes were produced from January to July than last year, as 2 % decrease, according to the data presented by the Department of Treasury’s Alcohol and Tobacco Tax Bureau.
Little cigars are more profitable to sell than regular cigarettes, which unlike little cigars are available approximately everywhere.
Currently in New Jersey about 14% of adult people are smoking.