Tag Archives: cigarette taxes
Tobacco store owners claim their business would be affected dramatically if Washington lawmakers, desperate to cover $1 billion hole in state budget, would increase taxes for roll-your-own cigarettes.
Supporters of the tax hike say it would close a loophole that unfairly benefits to tobacco-rolling machine industry.
The rolling machines allow smokers roll their own cigarettes using loose tobacco and wrapping paper in cigarettes in nearly 10 minutes, at half price of pre-packaged cigarettes. That’s partially because state excise taxes – 15 cents per every cigarette – are not implied to the roll-your-own cigarettes.
Charles Bertrand runs two Tobacco shops in Washington and says that in case roll-your-own products will be taxed as conventional cigarettes he would have to shut down the business, as people will stop buying do-it-yourself tobacco products.
He admits less expensive alternatives are vital for the customers.
“Most of people coming here are low-income and elderly, they really believe that roll-your-own machines are a blessing for them,” Bertrand said.
However, supporters of increasing the tax on do-it-yourself cigs state the lawmakers should think about public health and fairness.
According to a study realized by the EU statistics agency, Irish consumers encountered the fifth highest overall prices among the 27 EU countries (18 % above average) on several categories of consumer goods and services.
The present survey was based on 2010 prices, it was found out that the cost of goods and services were the highest in Denmark (43% above average) and the most lower in Bulgaria (49% below).
Consumers in Ireland paid above-average prices in four of the six categories, clothing and electronic goods dropping just below the 27 nation tier.
The price of alcohol and tobacco products is 70% above the average, it is nearly three times what people pay in Bulgaria and Romania, and 28% higher than in the UK, that has the second highest prices in this category.
“This significant price variation happens due to dissimilarities in taxation of these products among member states,” EU statistics agency stated.
A week ago the agency declared that the mean income per head in Ireland joint third highest among the 27 EU countries in 2010 – 25 % higher than the average.
Also the survey underlined that Irish residents encountered the second highest prices for food and non-alcoholic beverages – 20% more than the EU average.
The Danish once again paid more in the food and non-alcoholic beverages category (36% higher than the EU average), while Romania and Bulgaria residents paid only two-thirds of the EU average.
At the average, goods and services cost 18% more in Ireland than in the UK.
The greatest difference between the two was mostly detected in the prices of alcohol and cigarettes (28% higher) and restaurants (26% higher). Probably the only category where people in the UK paid more than Irish residents was for electronic goods, which are 4% less here.
Ireland was also third highest behind Denmark and Portugal, when it comes to personal transport costs and spare parts, paying 16% above the EU average.
Commenting upon the study, the Irish Hotels Federation stated that the statistics hid “essential decrease” in hotel accommodation costs in Ireland since 2008. Prices have decreases by 30% in that period, the federation stated.
Irish Farmers Association state that the survey acknowledged that the food supply chain in Ireland “continues to be unstable”.
According to David Fitzsimons, manager of the Retail Excellence Ireland the survey underlined that the Irish retail sector had answered to a dramatic change in consumer expenditures. “One thing from this survey is clear – a great number of retailers are working at a loss,” he stated.
Confiscation of the untaxed tobacco products have raised greatly in the past five years despite drastic measures on ports and a blitz on stores and markets.
Approximately 200 million untaxed tobacco products intended for the illegal market, which would have sold at an expected loss to the Exchequer of close to €65m, are planned to be confiscated by the end of this year.
A three-year strategic plan aimed at untaxed tobacco products will see an increase in the number of Customs operations aiming people distributing cigarettes in shops, housing estates and under the shop’s counters.
Robert Hogan, the head of Custom’s Criminal Investigation Branch, stated that they planned to affect smugglers strongly next year.
He stated in an interview that there would be raised confiscations of both properties and cover loads, as legal goods are often smuggled into the country in the same transport containers as illegal cigarettes.
At present, if a person is stopped with untaxed tobacco products, they may take back their car or trailer after paying a fine.
“We practiced that in the past, because we do not have enough place and means to keep all vehicles. In the next year we will face an increase in the asset seizure. That means that we take the car and it won’t go back to the proprietor. Even if we have to spend more than €500 on crushing them, we will do that. In the proper sense of the word we are hitting them in the wallet; they do not receive the car back,” Mr. Talbot stated.
He also underlined that, from the next year, cover loads will also be confiscated to the State. The vehicles that can be crushed are those which carry illicit product to the shops or transporting an illegal load from a container to a house.
Mr. Talbot said that Ireland was apparently the most important target, because it was like a secret door to the UK.
The average price of a 20-pack of cigarettes in Ireland constitutes €8.55; this is more than 13 times the cost of a pack of cigarettes in Ukraine.
Customs that introduced a High Level Group to aim at tobacco also plan to raise the number of people prosecuted under the law.
In 2008, 85 people condemned of smuggling and distributing untaxed cigarettes, which increased to 165 in 2009.
Only 50 million cigarettes were confiscated in 2006 but this figure rose sharply to 218 million in 2009.
135 million counterfeit tobacco products were seized in 16 maritime containers brought from China, Russia and Thailand.
Indian nations located across the New York State have won another round in the continuous cigarette tax legal battle against the state: The tribal nations have the right to continue sales of tax-free cigarettes to non-members of the tribes within the territories of the sovereign tribes whereas the court examines whether the new NY tax legislation is constitutional.
Earlier this month the Second Circuit Court of Appeals ruled against the state solicitation to impose an injunction which prohibit the state from taxing cigarette sales on Nations’ land whereas several challenges to the new tax code are pending.
However the court decided to consolidate appeals filed by several Indian Nations in one case. The tribes initiated lawsuits and filed appeals against New York state tax legislation that would oblige them to collect taxes from sales of cigarettes to non-Indians by demanding wholesalers to pay $4.35-per-pack tax on all cigarettes sold across the state and impose the tax on Native tobacco shops.
“Of course this is not final decision, but the ruling by the appeals court permits our stores to continue operation for the near future,” admitted Robert Odawi Porter, leader of Seneca Indian Nation. “We are going to continue the legal fight against this unconstitutional effort by the state that violates our treaty rights and destroys our business as well as the jobs it provides.”
During the past several months, two separate courts ruled to reject the state from imposing its latest tax strategy.
In October, the U.S. District Court Judge David Hurd, gave a preliminary injunction in a lawsuit initiated by the Oneida Indian Nation against Gov. David Paterson and New York State, requesting the court to decide whether the new tax code is illegal. The tax law, approved last summer, ended the state’s long-term “forbearance” policy that permitted the Indian Nations tobacco business to prosper, earning billions of dollars for the state budget and opening thousands of work positions in the state.
This ruling was hailed by Oneida Nation.
“The Oneida Nation welcomes the decision of the federal appeals court that is continuing to reject New York state’s attempts to infringe the nation’s sovereignty by collecting taxes from wholesalers of products sold across the Oneida reservation as well as other Indian lands throughput this state,” state Mark F. Emery, director of communications. “Although we are convinced that such matters should be decided by negotiation, the Oneida nation is read to protect its freedoms in court.”
In the 25-page ruling, Judge Hurd gave significant evidence against the New York state amendments in tax law.
The judge agreed with Oneida that the legislation would cause irretrievable damage by demanding the nation to pay a $4.35-per-pack tax, which he named “unconstitutional,” since a sovereign nation tribe is not subject to taxation.
The state has filed an appeal against Hurd’s ruling.
Another ruling against the New York state was issued by Judge William Arcara of the Western District Court, who rejected the Seneca and Cayuga Nations’ motion for a preliminary injunction and provided a stay against the state imposing the tax legislation.
Arcara ruled that the nations’ tribal rights “are not unconstitutionally burdened” by the latest cigarette tax legislation, and that Indian nations failed to prove a likeability of success on the merits of their claims.
However, the judge admitted that the tax legislation is likely to have an adverse effect on the nations’ current tobacco businesses.
Cash-strapped Romania and Bulgaria hoped that taxing cigarettes would be an easy and simple method of raising money but the increases only pushed smokers to a constantly growing black market.
Criminal gangs and poor Roma communities that are situated near the borders of such countries as Macedonia, Ukraine and Serbia, where the prices on cigarette products are lower, were smuggling cigarettes that has wiped out profits from higher excise taxes.
This year Bulgarian government increased taxes by nearly a half and also ordered to customs officials and police officers check all shops and markets. Tax revenues from cigarette sales have decreased by nearly a third in 2010, according to data provided by the customs officials.
Bulgaria and Romania are the two poorest countries in the European Union that try to recover from deep recessions and their governments have a strong incentive to let their populations keep smoking in the near future.
Bulgaria revoked the national ban on smoking in all bars and restaurants in June due to pressure from cigarette manufacturers, importers and distributors and also due to the need for tobacco sales as public revenue dropped.
Only Kyustendil, a town of 70,000, hold the ban from July 1and the resentment is evident, with club owners worried about making both ends meet and clients frustrated. Few people believe that this ban will survive the winter.
Excise taxes on tobacco products are an important source of revenue and accounted for 10% of all Bulgaria’s gains last year, $1.15-billion (U.S.).
Bulgaria is the most addicted to smoking along with Greece, with some 40% of the population smokers, according to a recent survey conducted by the Eurobarometer. About 22 million of neighbor Romanian population smoke.
“The abrupt excise increase revolted many consumers and raised the demand for cheap cigarettes. At present we see some brands that we have never seen before,” declared Ivan Bilarev, administrative manager of state-controlled Bulgartabak.
Cigarette prices in Bulgaria and Romania are well below than in many other European countries, about 2.00-2.50 euros per pack, but still rather expensive for consumers as they receive lower incomes.
That is why many smokers prefer cigarettes from black marker, as there a pack of cigarettes costs 1.00-1.75 euros.
Mr. Bilarev declared that smuggling has affected sales at Bulgartabak and according to some analysts a total smoking ban would lower the company’s price a pending privatization.
Overall losses from smuggling will probably overbalance tax profits as Bulgaria effort to fight the raising black market that has increased to over 30 % of all cigarette sales and could cost 500 million levs in lost profits this year.
Romania has the same problems as Bulgaria, after doubling cigarette prices in 2009 then increasing value added tax (VAT).
It was estimated that about a third of cigarettes in Romania are smuggled and it could cost the state over 1 billion euros.
First look at prices of cigarettes you want to buy, look at Contact page. Every honest company should have its customer service phone line. See where the company is registered or located.
Learn about payment options. Online store website must use SSL or any other secure payment processing systems. Be very attentive with payment processing time. While credit card payments are accepted at most in one day, e-check payment processing may take up to 14 days. Usually online stores count delivery time from date of shipping, not date of placing an order. If you have any questions call customer service. After you have cleared up everything, and sure that the company worth to be trusted go ahead and place your order.
During the first six months of 2009, the volume of tobacco products sales across Maryland have fallen by 25. Have the 25 percent of regular smokers that live in Maryland simultaneously dropped smoking looking for a healthy life? I don’t think so.
The major reason for such a dramatic drop is the increase in the state cigarette taxes, that made Maryland become the fourth state in the list of state with highest cigarette taxes.
Maryland smokers currently have to pay $2 for each pack of cigarettes they buy across the state. The previous tax was $1-per pack.
One part of smokers decided to limit the consumption of precious smokes, and the other part simply turned their heads to flourishing black market.
Legislators state that they have increased cigarette taxes to help Maryland smokers kick down their harmful habit in favor of a more healthy life. However, this statement is rather ridiculous since the last thing that those adult smokers need is a nanny state telling them what they should do.
Nevertheless, as we all understand the actual aim of the tax increase is collecting more money to help cash-strapped state to cope with dramatic hole in the budget that local government has created by their own. Their intentions are rather clear, since it became popular recently to tax the unpopular minority instead of protecting their personal rights and freedoms.
Thus, as the independent analysts had anticipated, the amount of profit generated by exceptional tobacco taxes has been mush smaller than the government expected. It is just another proof to the axiom that lack of economic knowledge results in revenue losses.
Before approving the tax increase, the Maryland lawmakers should have looked on the state map better. The matter is that every state neighboring Maryland has lower cigarette taxes: Pennsylvania has a $1.35-a-pack, Delaware’s smokers pay $1.15 tax, Virginia is home to one of the lowest taxes in the nation with modest 30 cents per pack, and West Virginia has 55 cent-per pack cigarette tax. Since Maryland is very small in size, its residents prefer to cross the borderline to stock up for cigarettes in the neighboring states.
It was proven a long time ago, that the more restrictions the lawmakers place on a product, the more flourishing the black market becomes. Smokers seek cheaper cigarettes and the black market supplies them, so it is not surprising that police authorities claim they expect the number of detained cigarettes smugglers to double this year in comparison to the previous years.
Maryland authorities state thy have taken control on the smugglers of cigarettes. Police agents have been standing across the borders of Maryland to detain every person who has more cigarettes in their cars than the legal limit permits (two packs), and every individual caught on smuggling would face hefty fines and even prison terms.
Well, in my humble opinion, it is just a plain stupid initiative. I do really think that police officers should better crack down the gangs of smugglers instead of detaining people looking for the opportunities to buy cigarettes at lower cost since they simple could not afford paying $8 for every cigarette pack.