Smokers pinched by price jump

A federal tax hike on tobacco doesn't kick in until next week, but smokers already are noticing higher prices.


A 62-cent increase in the federal tax on a pack of cigarettes goes into effect April 1. Tobacco companies already have raised prices in anticipation of the new tax - which will apply to all inventory they have on hand - pushing the cost of many brands well past $4 per pack.

"We raised our prices primarily to cover the cost of the tax," said Bill Phelps, a spokesman for Altria, the company that owns Marlboro-maker Philip Morris.

On the bright side, the tax hike may push some smokers to quit. Studies show that, for every 10 percent increase in the cost of cigarettes, smoking declines by 4 percent among adults and 7 percent among children.

"As the price of cigarettes in general goes up, consumption goes down, which is the case with everything," said Derrick Gable, tobacco use prevention coordinator for the Northeast Georgia Public Health District.

At the Lay-Z-Shopper, a downtown Athens convenience store, tobacco sales remain steady, although some customers have been complaining about the higher prices and switching to less expensive brands, manager Raed Asmer said.

"Sales won't change," Mr. Asmer said. "People will still buy it, no matter what."

Mr. Phelps, though, acknowledges that the tax is likely to cut into tobacco companies' business. Altria is anticipating that it will sell fewer cigarettes once the tax hike takes effect.

"We expect the increase to accelerate the decline in sales of cigarettes," he said.

The tax increase will raise an estimated $32.8 billion to help fund health care for children.

The tax on cigarettes is slated to rise from 39 cents to $1.01.

Taxes on cigars, pipe tobacco, chewing tobacco and loose tobacco for rolling cigarettes also will go up.

Georgia smokers still will pay less than residents in most other states. State excise and sales taxes on a pack of cigarettes total 55 cents, fifth-lowest in the country, according to the advocacy group Campaign for Tobacco-Free Kids.

Democrats in the Legislature pushed to raise the state tax on cigarettes by $1 per pack, a move they said would raise $450 million to help ease a budget crisis. The bill failed to pass the House by the deadline to be considered in the Senate.

Meanwhile, in South Carolina a 50-cent cigarette tax increase is up for debate.

Plans to raise the nation's lowest cigarette tax by 50 cents to support a new health insurance program for low-paid South Carolina workers appear to have broad support.

A House Ways and Means subcommittee takes up the bill today and it is expected to be sent to the House for debate later this week.

House Speaker Bobby Harrell of Charleston sponsored the bill and House Minority Leader Harry Ott of St. Matthews supports it.

The legislation generates $147 million, with $139 million for a new insurance program. Under that program, workers who earn up to 200 percent of the federal poverty level would get a 75 percent credit on health insurance through the Palmetto Health Care Safety Net Program. The state support would be capped at $3,000 a year.

The Associated Press contributed to this report.



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