Tobacco Costs Explode As Federal Tax Soars

Source from:  Albany Democrat-Herald 04/07/2009

When Mary Grill started working at Richey's Market 24 years ago, a carton of cigarettes - 10 packs, 200 cigarettes - cost about $5. Wednesday morning, Grill said the most expensive cigarettes sold at the store are almost $57. The lowest-priced cartons are almost $43. The store recently bumped its prices significantly in anticipation of a 62-cents per pack federal tax increase - going from 39 cents to $1.01 - that went into effect April 1. Individual packs of cigarettes are priced from $4.29 to $5.69 each. Oregon lawmakers also are considering hiking the state tobacco tax as well. Proceeds will be used to fund the Children's Health Insurance Program, which provides medical care for low-income, uninsured children. "Cartons and cartons went out of here yesterday," Grill said. "I don't smoke, but I do think people have the right to choose." The increased taxes are being imposed on all forms of tobacco - cigarettes, cigars, pipe tobacco, chewing tobacco, snuff, and items such as cigar wraps. The tax is retroactive - store owners or managers must take an inventory of all tobacco products on hand, report it to the federal government, and pay the difference between the tax they have already paid and the new tax rate. In Oregon, the combined state and federal taxes on a pack of cigarettes is $2.19. Washington state's total is $3.03. New York has the highest combined rate of $3.76 per pack, and the lowest rate is $1.08 in South Carolina. Jesse Freeby, co-owner of Tony's Smoke Shop on Northwest Ninth Street in Corvallis, said the new tax is 4 cents per small cigar. There's also a $23 per pound tax on bulk smoking tobacco. Freeby raised the price of cans of tobacco from $19.95 to $24.95. Cigar wraps went up from 99 cents to $1.25. Packages with two wraps will be $1.99. In other parts of the country, cigar stores are nervous about the up to 40 cents tax that will be in effect for larger cigars. "As a business owner, I hate it," Freeby said. "A tax increase is never good from a business standpoint. But, we will weather the storm." Andy Tokstad, 18, of Corvallis, said he has smoked for about a year and already has begun cutting back, with plans to quit completely. "Cigarettes have gone up from $3.40 per pack to about $5 per pack," Tokstad said. "I work in Newport and cigarettes are $5.24 per pack there." Tokstad said he is down to three or four cigarettes per day. He had smoked a pack or two per day. "The government is kind of forcing us to quit," Tokstad said. "I don't know how much other stuff they are going to tax." Smoke Free Oregon supports the federal tax increase based on statistics that show higher costs help reduce the number of young people who start smoking and increase the number of adults who quit. According to the organization's Web site, the tax increase will: ·Result in 21,000 fewer Oregon kids starting smoking. ·Be the impetus for 21,000 adults to quit smoking. ·Prevent 3,000 smoking-affected births over the next five years. According to the organization, smoking-related diseases cost the Oregon Health Plan $287 million per year, and nationwide healthcare expenditures and loss of productivity caused by tobacco smoking add up to more than $2.1 billion annually. Enditem