Tobacco users beaten to punch on tax hike
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Some smokers purchased cartons of cigarettes yesterday in hopes of avoiding the whopping federal excise tax increase from 39 cents to $1.01 per pack that takes effect today, part of the largest tobacco tax hike ever.
Other smokers -- those who roll their own cigarettes, smoke small cigars, pinch snuff or chew tobacco -- may have thought their vice of choice was once more not part of the federal tobacco tax increase.
But all of those smokers awoke to an April Fool's Day in which the joke was on them. And they're not laughing.
The cigarette buyers who thought they were saving money found out that prices in most places are the same today as they were yesterday because manufacturers pre-emptively raised prices three weeks ago, a move that has drawn sharp criticism from retailers.
And other smokers learned that excise taxes were raised on all tobacco products -- including $25 on a pound of roll-your-own tobacco, raising its cost from about $15 to $40.
"The increase on the roll-your-own tobacco is, as my sons would say, ginormous," said Steve Klein, owner of Save-Mor Beer & Pop Warehouse, Squirrel Hill. "For years and years they have increased taxes on cigarettes but never increased taxes on [other tobacco products].
"Cigarette companies have been trying to get them taxed, too. As soon as [Barack] Obama came into office, we knew it was going to happen."
The tobacco tax increase was imposed to finance President Obama's major expansion of health insurance for children, an initiative he signed shortly after taking office.
Monica Jones, spokeswoman for Altoona-based Sheetz Inc., said manufacturers three weeks ago raised their cost to retailers by 80 cents per pack -- 62 cents for the looming tax increase and another 18 cents "just for giggles."
"We put out notification bulletins at registers alerting customers that this was handed down from the manufacturers on March 11. [The tax] is just going to be extracted by the government starting [today] instead of by the manufacturers. Everything heretofore has been pure profit for manufacturers," she said.
"We sympathize with customers and we're doing our best within our realm to keep prices as low as possible. We're selling at the state minimum which we can't go below but we won't go higher than that either."
Steve Busche, general manager of nine Puff Discount Tobacco stores, said the media led customers to believe that they would face another 62-cent-per-pack increase today in addition to the manufacturers' price hike, leading to some panic buying yesterday. He spent the day moving inventory from one store to another to keep up with the demand.
Annie Fey, manager of the Puff store in Braddock Hills, said smokers were buying cartons of cigarettes in the mistaken belief they were saving money.
Tom Phillips of North Braddock, a smoker for 40 of his 65 years, was among them, buying a $40 carton of Pall Malls. He thought he had saved $6.20 by doing so before today until a reporter told him otherwise.
"This may make me stop smoking," he said of the increased cost. "I've already cut way back over the past couple of weeks, from two packs a day to not quite one pack."
Ms. Fey said cost-conscious smokers buying multiple cartons of cigarettes wasn't unusual yesterday.
"Quite a few people were buying four or five cartons," Ms. Fey said, "and we told them the price would be the same tomorrow but they bought them anyway."
Indeed, Luann Parks, 50, of Wilkinsburg, wasn't convinced that a clerk knew what she was talking about when she explained cigarette prices would be the same today as they were yesterday.
"Are you sure?" she repeatedly asked. "Are you sure?"
Outside, she admitted the she still wasn't sure what to think -- except that such steep tax increases were "unfair."
"If they wanted us to quit smoking, they wouldn't [allow them to be sold]. We'd all get by. But we're addicted and they know it and know they can get taxes off of us. And still we're made to feel like lepers," said Ms. Parks, a smoker for half her life who purchased a pound of roll-your-own tobacco for her son and three packs of cigarettes for herself.
"We're paying everybody's taxes. We shouldn't feel like lepers."
Richard Teck of Bethel Park lugged two shopping bags out of the store as he and his wife, Christine, made the last of five visits there since Friday. Yesterday they bought two pounds of tobacco, bringing their total purchases to about 24 pounds. They also purchased a rolling machine, papers and cigarette packs that were on sale.
"This will last us two months -- I'm hoping," Ms. Teck said, noting the couple began rolling their own cigarettes last year because of the high cost of buying packs. "Once we're done with this, we're going to quit -- or really cut down.
"Cigarette stores are probably happy today but they won't be happy after today."
First Published April 1, 2009 12:00 am