Nebraska retailers oppose cigarette tax increase

Increasing the statewide cigarette tax by three times would affect Nebraska retailers significantly, as the customers would switch to Iowa and Missouri tobacco shops, where they would be able to save nearly $18 per carton, according to state lawmakers.

Mark Whitehead, owner of convenience store chain across the state testified that sales of tobacco products make up 35 percent of total sales. “This business is focused to providing a service an a product to the clients, and cigarettes represent the top-selling product category.”

However, supporters of cigarette tax hike stated that “customers’ exodus” didn’t happen when the tax was increased last time, in 2002 and should not be a major issue now.

They claimed the price hike would encourage thousands of people to stop or never start smoking, in addition to generating approximately $100 million every year in revenue to prevent cuts in such state care programs as health-care and education.

Grand Island Sen. Mike Gloor, the author of the bill said that smoking is the top health issue in Nebraska and needs to be curbed.

Gloor stated he had seen horrible health complications caused by smoking while he was working as a hospital administrator. He said he pledged to himself he would do his best to resolve that problem in case he ever gained the chance.

That resulted in the introduction of Legislative Bill 436, under which the state’s cigarette tax would be increased from 64 cents per pack up to $1.99 per pack. Neighboring Iowa has $1.36 per pack and Missouri’s is home to the nation’s lowest cigarette tax at 17 cents a pack.

Currently Nebraska is ranked 38th among the states in cigarette tax rate. If the increase is approved, the state tax will become 16th-highest. In addition, according to Gloor several states consider increasing the taxes as well.

However, he admitted that in case the Bill 436 is approved, it won’t be only for the reasons of public health, but also for financial reasons, as the state is eager to find sources of extra revenue.

The bill will provide approximately $31 million every year to avoid expected cuts in payments to health-care sector, and nearly $500,000 would be directed to smoking-cessation programs.

Nevertheless the most part – nearly $70 million annually – would be generated for the state budget to help close an approximately $1 billion gap between estimated earnings and projected expenses.

Kearney Sen. Galen Hadley said that the bill and corresponding tax hike would affect low-income Nebraskans more significantly, since more people in this social group are smokers. In addition York Sen. Greg Adams asked if it was fair to hit the minority of residents (around 19 percent) who are smokers with a huge increase.

Gov. Dave Heineman has promised to veto any tax hike, including the cigarette tax. Therefore, supporters would have to collect 30 votes in the Legislature to supersede the veto.

Smokers say they will light up despite price hike

Though the federal tax hike regarding cigarettes and other tobacco products is coming into effect in the first day of April, thousands cigarette store owners have already felt the consequences of this increase since cigarette companies had raised up prices on their cigarettes in order to gain some extra revenue before the tax enters into force and sales will decrease significantly.

Beginning from April, the tax on every pack of cigarettes will go up from 39 cents to $1, which is more than 100 percent jump. For cartons, containing 10 packs, the tax will raise from $3.90 to $10. That makes a simply huge increase, isn’t it?

But that doesn’t mean customers would definitely stop buying cigarettes.

The Government hiked cigarette taxes stating that the revenue would go to health insurance for poor children. However, the vast majority of smokers are from a low to middle income social class; for many of them smoking is the only available pleasure. And with economy entering in recession, many of these simple workers have lost their jobs, and are trying to save themselves from stress and depression by lighting up a cigarette and relaxing. With the upcoming tax increase and subsequent price increase the government simply took the only pleasure of those people away. All we have to do is simply wondering where all the promises of our new Administration have gone?

The cigs shop in Hartland had to increase prices on cigarettes and tobacco containing products three times in the last two months. Its owner, Mitchell M. complained that during last three weeks, best-selling Marlboros have jumped from $3.54 to $4.20, excluding tax, discount 305 cigarettes, have risen from $2 to $2.25. Kathie S., the store manager said that the prices will double within next month.

Suleiman, mentioned that they were doing their best in order to raise prices gradually enough to shock their customers less, however their clients are anyway stunned and dumbfounded with the new price.

“How much?” 25-yearl-old Lindsey G. exclaimed, starting to tremble and shaking her head, trying to believe in what she had heard. She paid around $6 for a pack of her favorite Marlboro Lights, including taxes. Lindsey, resident of Hartland has been a regular customer of the cigs shop for more than 3 years, but said that the upcoming tax increase would make her give up, since she simply could not afford it anymore.

However, another customer, Marcia D., though was deeply shocked at the price hike, said she would not make her give up her pack-a-day habit. She said that she had been smoking for 30 years out of her 47 thus it was too late for her to quit. Marcia added that her husband has supported her habit being a chain-smoker himself, thus her only concern was find some extra money to pay for their Marlboros more.

While customers like Marcia consider remaining faithful to expensive brands like Marlboro, cheap cigs shop manager Kathie S. thinks that many people will start smoking cheaper brand, like 305s, the price for which will go up to s $3 beginning with April 1.

“The new tax is certainly going to affect the generic brands, too, but even with the increase, they’re still going to be the cheapest,” Ms. Marcia said.

In addition, there were many customers on Saturday, who appeared to be completely unaware of the tax’s origins. Thus, the cheap cigs shop owner, Owen R., explained to every now more than ever precious client that the revenue forms part of the Children’s Health Insurance Program Reauthorization Act, signed on Feb. 4 by president Barack Obama. According to the Act all the revenue would go provide medical insurance for almost 4 million children.