Tobacco tax has many ‘smoking’

Henry Malone of Leadwood said it was the last straw that made him quit cold turkey.

Dale Davidson said it started him on the path by forcing him to cut back.

But Tonya Harrington-Barton said she is not going to let the recent jump in cigarette prices force her to quit a habit she enjoys.

Even before the new federal excise tax increase took effect, smokers were complaining about a jump in prices. Some decided the price — up to $9 more per 10-pack carton locally — had finally become too high to afford. Others decided they would change from top brands to lower-tier brands of cigarettes to reduce their increased cost. Others blogged angrily about the tax and jumped from that to everything they are frustrated about with the government.

Complicating the situation was confusion about a price hike that started in March, nearly a month before the scheduled hike was to take place.

“The tobacco companies surprised everyone and increased the cost of tobacco products by $7 or $8 in March,” said Dean Bone, owner of EZ Stop in Farmington. “The tax hike didn’t take place until April 1, so for those few weeks, the companies made extra money.”

When the prices jumped in March, retailers and customers feared the new tax would be in addition to that price hike. The uncertainty and speculation continued throughout March.

Children’s health care

In early February, President Barack Obama signed an expansion of the State Children’s Health Insurance Program (S-Chip) to continue insurance coverage for 7 million children across the country, cover 4 million additional children in need, and lift the ban that prohibited states from providing insurance to legal immigrant children if they wanted to do so.

During his White House speech, Obama said, “Since it was created more than 10 years ago, the Children’s Health Insurance Program has been a lifeline for millions of children whose parents work full time, and don’t qualify for Medicaid, but through no fault of their own don’t have — and can’t afford — private insurance.”

There was bad news for smokers, however. The expansion included an increase in the federal tobacco tax to 61.66 cents per pack of cigarettes. Nearly half the states are considering or already have raised their state cigarette taxes. According to the National Conference of State Legislatures Web site (http://www.ncsl.org/programs/health/Tobacco_Tax_bill09.htm ), the federal cigarette tax increase and other changes resulting from the program are expected to raise budget revenue by $32.5 billion over five years and by $65.6 billion over 10 years.

In Missouri, the increased federal tax would result in a total tax increase of $6.17 per carton of cigarettes, retailers were told.

Then, in March, the increase in price came from the major tobacco companies, including Philip Morris (cigarette brands include Marlboro, Virginia Slims, Benson & Hedges, Merit, and Parliament), R.J. Reynolds Tobacco Company (Winston, Camel, Salem, and Doral)  and Lorillard Tobacco Company (Newport, Maverick, Old Gold, Kent, True, Satin, and Max).

“All of us in the industry thought the major manufacturers would increase the price first, then would go up the additional $6 in taxes,” said Fred Teutenberg, president of the Dirt Cheap cigarette and liquor stores. “The major companies raised their carton (prices) $7 to $9. They don’t discuss price increases ahead of time, so nobody knew what was going to happen.”

On April 1, the new prices stayed the same. However, retailers and wholesalers had to pay a “floor tax,” meaning the new $6.17 tax on every carton of cigarettes in inventory, Teutenberg said.

That was not as big a problem on the lower-tier cigarettes, he added. However, they also had to pay the tax on any cartons of the brands that had been purchased at the new price that were still in the store.

“We actually paid twice on some of those cigarettes,” Teutenberg said.

Bone called it a double tax.

“I’m surprised no one has charged these companies for price gouging,” he said. “I wish someone would.”

Steeper prices

In the Parkland, prices for cartons of cigarettes have increased at least $6 for cheaper brands and nearly $10 more for name brands. Marlboros, for example, now cost $43 per carton at Ms. B’s in Leadington, which is a $7 per carton increase from February’s prices, Manager Dale Davidson said.

“The second week of March, the price went up,” he explained. “People thought it was the tax. They just raised the prices the cost of the tax a few weeks early, so it didn’t change on April 1.

Cigarette packs at the store now range in price from $4.12 to $5.30, compared the $3.50 to $5.25 before the March increase. USA, a lower-tiered brand, increased from $2.65 per pack to $3.50.

Prices are a bit lower at EZ Stop — for example, Marlboros are $39.99 per carton —  but the increase has cost Bone customers.

We dropped about 15 percent in sales,” he said. “I had several customers who handed the cigarettes back and said they weren’t going to pay that much.”

Some increases were even higher. Filtered cigars of one brand, for example, were $11.99 for a carton of 10 packs, which resemble cigarette packs. Now, the price is $34.99 at Teutenberg’s stores.

Davidson said several of his customers were switching to lower-priced brands.

“People who say they’re going to quit keep coming back to buy a pack,” he added. “A few people are changing to chewing tobacco instead of smoking. Only about 5 percent really quit.”

Teutenberg said that before March 31, his staff suggested customers to stock up on cigarettes. He expected a big drop in the volume of sales after April 1. It did not happen.

“Actually we did not have that great a sales reduction,” he noted. “But people are trading down from the $39 Marlboros and $38 Camels to the $19.99 lower-tiered cigarettes.”

The lower priced cartons used to be $13 each, he added. Despite the increase, Teutenberg said he plans to continue smoking.

“I enjoy smoking and I’m not going to quit smoking,” he said. “I think a number of people feel that way.”

Although chewing tobacco was included in the federal tax increase, the price of Skoal and Copenhagen has dropped about $1, said Davidson. That is because Phillip Morris bought the brands and made them more competitive with other “moist” tobacco prices, he said.

“Roll your own” tobacco sales also have drawn additional interest because the bulk tobacco is much less expensive than ready made cigarettes. The bulk tobacco is available to consumers by the bag or pound, Teutenberg said.

A bag, or pouch, that fills nearly the same amount of cigarettes in two packs used to cost about $1.75. That cost has risen to $3.19 per pouch. Tobacco sold in cans jumped from $8 or $9 to $25 or $26.

The U.S. Surgeon General Cass called excise taxes one of the most effective ways to reduce smoking rates. According to National Conference Web site, “for every 10 percent increase in cigarette prices, smoking rates fall by the following scale:  7 percent among pregnant women, 7 percent among youth and 4 percent among adults. Also, one out of 15 college-age smokers quits as a result, according to the site.

Missouri spends about $2.24 billion annually (including $532 million by state Medicaid) to treat smoking-related illnesses and $10.1 million for the care of newborns whose mothers smoked during pregnancy, according to the Missouri Department of Health and Senior Services’ Tobacco State Fact Sheet. In 2007, the state ranked fourth highest in the nation in the prevalence of adult smokers.

From 200-2004, nearly 10,000 Missourians died annually from smoking-related diseases such as cancer and cardiovascular and respiratory diseases, including 29 infants who died due to their mothers smoking during pregnancy.

Secondhand smoke causes an average of 1,180 deaths in Missouri each year, according to the Department.

Smokers respond

It did not take long for the new prices to raise smokers’ hackles or cause them to quit. Davidson, 43, said the new prices helped him decide to end “my final guilty pleasure.”

“I’ve smoked 25 years, and I’ve tried to quit before, but my heart wasn’t in it,” he said.

Davidson said he used to smoke a pack a day, but has reduced it to five cigarettes in a week-and-a-half. He plans to ease his way into quitting for good.

Henry Malone, started smoking about 40 years ago, when he was 16. He had tried hypnosis before and quit for two years. Then, when camping with his buddies, he joined them in smoking and was hooked again.

The price hike was the last straw.

“I was paying $28 for a carton of cigarettes one day, and the next time it was almost $38,” he said. “On March 18, I had one cigarette in my pack and I told my friend it was the last one I was going to buy. He said, ‘Yeah, right.’

“I haven’t had one since.”

Malone said that unlike the past, he is not tempted to return to his habit.

“I don’t miss it at all. I feel better. It’s the first time in a long time that I’ve smelled things clearly,” Malone said. “Food is tasting really great — I’ve put on five pounds.

“I feel like I can run across the street now if I had to. I can breathe a lot better and I rest better at night.”

Kimberly Swart of Southeast Missouri Mental Health Center, which has been a smoke-free facility for more than a year, quit smoking at the request of her son. Cost was a factor as well, she said.

 “I really do not want to spend over $5 a pack to smoke. That is was too much money!” she said. “Hopefully, this time I will not go back to smoking, but at this point, I am taking it one day, sometimes one hour at a time.”

Several of her co-workers have told Swart that they will continue to smoke, regardless of the price.

Their position is echoed by Daily Journal readers Anita Brinkley and Tonya Harrington-Barton.

Brinkley has been a smoker since her mid-teens, more than 34 years ago.

“I would love to quit to not only be healthier, but to not give the government my hard earned money,” she said. “Do they think that smoking is the only deadly killer out there? What about the fact that child obesity is at its highest, causing children to have heart problems and diabetes at a much younger age?

“Why not tax candy and soda? Maybe that would force parents to not buy those foods and instead buy fruits, vegetables, and drink plain ‘ole water.”

 “I hate it that I smoke and I hate it even more that I am stupid and addicted enough to continue buying them, but that is my choice. I don’t need the government to make that choice for me, they make enough choices for us as it is.”

Tonya Harrington-Barton said she objects to the government interfering with her right to smoke.

“I’m a law obeying, tax paying, God-loving woman and I think it’s an infringement of my rights to be taxed to death as well as being condemned in the public places,” she related. “My Mom died of lung cancer, my father-in-law died of liver cancer, my grandpa died of cancer, my whole family has suffered and are still suffering from cancer.

“I’m tired of being looked down on because I smoke! I feel it’s my choice and freedom!”

The tax increase is only a few weeks old, and things could soon settle down. Bone says he already is seeing his sales numbers coming back up. Some smokers who told store staff they were quitting are still buying tobacco, even if they have changed brands.

“Obviously, it’s too soon to make any earthquaking, categorical statements, Teutenberg said.

Paula Barr is a reporter for the Daily Journal and can be reached at 573-431-2010, ext. 172 or at pbarr@dailyjournalonline.com.