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Taxes Could Send Cigarette Habit Up In Smoke

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By CHRISTIAN M. WADE

cwade@tampatrib.com

Published: March 18, 2009

TAMPA - For smokers in Florida, cigarettes have been a relatively inexpensive addiction, even as a pack has neared $4 for most brands.

The state's cigarette tax of 34 cents a pack hasn't gone up in two decades, making the Sunshine State one of the cheapest in the country to pick up the habit.

That may soon change.

On April 1, the federal excise tax on cigarettes will rise to $1.01 a pack, up 62 cents from the current level, and the Florida Legislature is considering a $1-a-pack increase in the state tax.

Together, the one-two tax punch could push many brands in Florida beyond $5 a pack, a prospect that has some smokers thinking twice.

"If it comes down to paying bills or buying smokes," said 67-year-old Terry Barton, a smoker for 40 years, "the choice is obvious."

Major tobacco companies, which expect to sell fewer cigarettes under the new tax, have already raised prices to boost revenue ahead of next month's federal increase.

Philip Morris USA raised the price of Marlboro, Virginia Slims and other brands by 71 cents a pack March 9, and other tobacco companies have followed during the past week.

David Sutton, a Philip Morris spokesman, said tobacco companies are already paying the increased federal tax on cigarettes now being manufactured, even through the products won't hit the shelves for months.

"We need to recover those costs," he said.

The tax increase on cigarettes and other tobacco products is expected to raise about $35 billion for the federal government during the next five years to provide medical coverage to an estimated 4 million more uninsured children.

State Tax For Medical Programs

State lawmakers have taken notice. Facing a $6 billion budget shortfall, the Legislature is considering a steep cigarette tax increase to pay for medical programs.

Lawmakers in both parties have filed proposals for cigarette tax increases and, although estimates vary, most expect the move to generate about $900 million in revenue if passed.

Still, the proposed increase is far from being adopted. Gov. Charlie Crist has been critical of the idea, and House Republicans are staunchly opposed.

To make the proposal more attractive to anti-tax politicians, Democrat Bill Heller of St. Petersburg has offered a bill to strike the word "tax" in state law covering tobacco and replace it with the softer sounding "user fee."

Local retailers are already fuming.

"It's already starting to impact our business," said Benjamin McComb, a manager at Tobacco Depot, which has 17 locations across the Tampa Bay area. "Because many of the manufacturers have increased prices and we've been forced to absorb the costs."

Sin Tax Addicts

Some argue that the government is too dependent on "sin" taxes and that the increases, whether state or federal, will create a hardship on the people who can least afford it.

Beyond the increased cost to consumers, the higher prices will result in a 10 percent decline in cigarette sales and jeopardize 117,000 jobs across the country, according to the National Association of Tobacco Outlets.

In addition to the cigarette tax, the federal government is raising the tax on large cigars to 40 cents apiece, up from 5 cents. Pipe tobacco will increase from $1.10 to $2.83. Chewing tobacco will increase from 19 cents a pound to 50 cents a pound.

"I have no problem with paying taxes," said Don Barco, owner of King Corona Cigars in Ybor City. "What I do resent is that they turn to tobacco whenever they need money."

Retailers also worry that the tax increases will drive customers to online stores or Indian reservations in search of lower-priced cigarettes.

Tribe Exempt From State Tax

Florida's Seminole Tribe pays federal taxes on its cigarette sales but is exempt from state taxes. The tribe expects to begin charging more for cigarettes in reservation stores now that the federal tax rate has gone up.

"We're not expecting a major windfall in sales," Seminole spokesman Gary Bitner said.

That could change if the state Legislature votes to increase the cigarette tax during the current legislative session.

The national Centers for Disease Control and Prevention estimates that nearly 20 percent of the nation's adults, or 43.4 million people, are smokers. In Florida, the estimate is nearly 19 percent, or about 2.5 million people.

Will Smokers Quit?

Health officials hope the tax increases will encourage people to kick the habit.

"Besides the health benefits, there's a major financial incentive for quitting," said Jolene Bivens, regional director for the American Lung Association in St. Petersburg.

Smoking kills 440,000 Americans annually and also results in more than $193 billion in medical expenses, according to the CDC.

Smoking rates are often higher where state tobacco taxes are lower.

Nationwide, the average state cigarette tax is $1.32 a pack, ranging from a low of 7 cents in South Carolina to a high of $2.75 in New York state, where cigarettes can cost as much as $8 a pack.

"If it gets as expensive as it is up North," said 26-year-old Ryan Calle of Tampa, "I'm quitting."

Tribune researcher Melanie Coon contributed to this report. Reporter Christian M. Wade can be reached at (813) 259-7679

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