Casey's Views Ill. Cigarette Tax Hike With Rose-Colored Glasses

"We see is a bump in margin, gross-profit dollars"

Steve Holtz, Editor in Chief, CSP Daily News

ANKENY, Iowa -- With the new $1-per-pack increase to Illinois' tax on cigarettes, Casey's General Stores executives are anticipating some benefits based on past history of similar tax hikes.

"Typically what happens is … people will migrate to more pack purchasing than they do carton purchasing, but they don't curtail their smoking habits," CFO Bill Walljasper said on a quarterly earnings conference call on June 13. The packs carry a "higher margin than the cartons, and eventually what we see is a little bit of a bump in margin and a little bit of a bump in gross-profit dollars."

The Illinois legislature passed last week and Governor Pat Quinn signed the $1-per-pack cigarette tax increase, effective June 24 (see Related Content below for previous CSP Daily News coverage). It also raised the other tobacco products (OTP) tax to 36% effective July 1, 2012, changed taxation on moist smokeless tobacco to a weight-based rate of 30 cents per ounce effective Jan. 1, 2013, and included little cigars in the definition of cigarettes to tax little cigars at the $1.98-per-pack cigarette tax rate effective July 1, 2012.

The bill does not assess a floor stocks tax on retailers.

Based in Ankeny, Iowa, Casey's General Stores Inc. is a leading independently owned convenience store chain in the Midwest and one of the largest in the country. As of Jan. 31, 2012, the company owned and operated 1,686 stores in 11 states.

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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