Cigarette taxes took a major jump Wednesday — and it was no April Fools' joke. WSBT-TV Photo
Story Created:
Apr 1, 2009 at 3:32 PM EST
Story Updated:
Apr 3, 2009 at 11:31 AM EST
SOUTH BEND — Tobacco prices soared today. The federal excise tax increased more than 150 percent. What you pay varies from state to state. People in Indiana will pay about two dollars in taxes. Michigan tops out just over three dollars.
Customers left some of the shelves down to the bare walls at Low Bob's Tobacco Shop.
Many were in search of a deal on their cigarettes, cigars, chew and tobacco, before Wednesday's excise tax increase,which sent prices soaring.
"Little cigars went up dramatically," said Frank Davoli, director of purchasing for Master Distributors. "Those went up like 95 cents per pack. or $9.50 per carton."
Cigarette prices per carton rose.
Master Distributors pay between $6 and $8 now, or 80 cent per pack. Consumers, pay much more, depending on the brand.
"$112 dollars for three cartons," said Terry Hanner a smoker for more than 40 years.
Hanner says he used to pay 20 dollars per carton to support his pack to a pack and a half per day habit.
With prices, nearly double. He says it may break the bank.
"It's going to break us from smoking," said Hanner. "I used to drink alcohol, when I gave that up it saved me a lot of money; if I turn around and quit smoking I'll have three times as much."
Analysts suggest when prices increase 10 percent, there's an 8 percent drop-off in tobacco use.
Davoli knows prices will affect business at his stores.
"It's yet to be seen what type of volume we'll be doing," said Davoli. "We anticipate a 10 percent decline in overall business."
Money provided by the tax will allow the government to spend those funds on the State's Children's Health Insurance Program.
Davoli fears the money will go up in smoke, because of the rate of the increase, the biggest in the nation's history.
"When you look at consumption rates declining, where's that shortfall going to be made up?" Davoli wonders.
Already, some hospitals like St. Joseph have noticed smoking cessation classes have nearly doubled since prices increased.
