MADISON, Wis. -- On January 1, Wisconsin's cigarette tax became the 12th highest in the U.S. at $1.77 a pack.
Tobacco Outlet Plus stores across the city were closed on New Year's Day, but employees told WISC-TV they worked all day changing prices to reflect the new tax before the start of 2008 business on Wednesday.
The tax hike is expected to generate $378.5 million of revenue over the next two years, according to state budget documents cited by The Baraboo News Republic.
The law will bring in more revenue [image-nocss] for the state, but health experts and anti-smoking advocates said it will give smokers more of an incentive to quit, said WISC-TV.
Last year a council of lawmakers and health care industry lobbyists recommended increasing the tax by $1.25, said the newspaper, and using the revenue to expand coverage of Medicaid, create an insurance pool for catastrophic care claims and lower health insurance premiums for small businesses.
The $1 increase was the result of a state budget compromise between Governor Jim Doyle and Assembly Speaker Mike Huebsch (R), who wanted a more modest 75 cent increase.
Wisconsin now has the 11th-highest tax on cigarettes in the nation, according to the Campaign for Tobacco-Free Kids.
But Sauk County smokers might not have to log on online to find cigarettes at a cheaper price than they are going for at area gas stations. The Ho-Chunk Nation's Whitetail Crossing & Smokeshop, next to its casino, will be selling cigarettes at a cheaper price, Shaji Philip, manager of the M&G Travel Mart Shell station in Baraboo, told the paper.
Philip said the tax on a carton of cigarettes is now $10, but the Ho-Chunk convenience store cartons will only carry a $5 tax. He said he expects that to play a role in cigarette sales at his business.
Employees at the Whitetail Crossing & Smokeshop said they could not comment and directed questions to the Ho-Chunk Nation's business office.
Also beginning Tuesday, the state tobacco tax in Maryland doubles from $1 per pack of cigarettes to $2, reported The Cumberland Times-News.
The tax increase was one of many the Maryland General Assembly voted in during November's three-week special legislative session. The tobacco tax rate increase is projected to generate $98 million new revenue in fiscal 2008 and another $162 million in fiscal 2009, the report said. Lawmakers' goal is to address a projected $1.5 billion budget shortfall.
Locally, though, the tax increase could see the ledgers of area businesses indicate a shortfall of their own. "I anticipate a drop in sales," Aileen Sturt told the paper from behind the counter at the BP gas station in Ellerslie, Md., just minutes from Hyndman, Pa.
Asked if she thought smokers would consider quitting smoking because of the tax increase, she said, "No, they'll just go elsewhere" to buy cigarettes.
"I've had several customers mention to me they're going to go to West Virginia," she said. "Pennsylvania's been higher than Maryland up to this point."
At Sturtz's BP, prices were as much as $5 for a single pack of premium smokes. The lowest discount pack was $2.97 each. Sturtz's best-selling brand, Marlboro, sold for $37.50 per carton. That increased by $10more than 26%on Tuesday.
A Sheetz manager in Keyser, W.Va., said she does not expect many more people to come from the McCoole area to her store for lower cigarette prices, for one simple reason. "They already do that," she told the paper.
West Virginia's tobacco tax is considerably lower and ranks 40th among the 50 states, according to the American Lung Association. There, state lawmakers passed in 2003 an increase from 17 cents per pack to 55 cents per pack. That action was expected to increase revenue by more than $200 million in 2004 alone.
A 2003 West Virginia University study indicated cigarette excise tax rates "are a relatively painless way to ease widespread budget problems."
Pennsylvania is 18th in the tobacco tax at $1.35 per pack. The national average is $1.073 per pack. New Jersey has the highest tax rate at $2.575 per pack compared to South Carolina's low of 7 cents per pack. Maryland's $1 per pack tax ranked 24th in the nation. The increase to $2 per pack jumps the state into a six-way tie for fourth with Alaska, Maine, Arizona, Michigan and Connecticut. The new rate sits behind only New Jersey, Rhode Island and Washington.
Meanwhile, in South Carolina, advocates are gearing up to push a bill supporting a cigarette tax increase through the State Senate when the General Assembly reconvenes next Tuesday, reported The Free Times. The state cigarette tax, 7 cents per pack, is the lowest in the nation and has been the same since 1977.
"It would be a wasted opportunity not to increase the cigarette tax this year," said State Senator Joel Lourie (D), a leading supporter of the bill. "I want the tax raised because of the ultimate effect it has on cigarette consumption, and because it is one of the few sources of revenue that can be used in improving health care."
The South Carolina Tobacco Collaborative, a coalition dedicated to reducing the toll of tobacco in the state, is engaged in a grassroots campaign supporting a cigarette tax increase. "We support raising the tax to the current national average of $1.11," Renee Martin, director of the collaborative, told the newspaper.
The collaborative estimates $222.7 million in new revenue annually and $1.3 billion in long-term health care savings for the state if the levy were raised 93 cents to $1 per pack.
The bill in the Senate would raise the tax by 45 cents to 52 cents.
Some Senators agree with raising the cigarette tax, but not with earmarking the revenue to health care, the report said. "If the cigarette tax is raised, there should be some tax relief elsewhere," said State Sen. Kevin Bryant (R). "For example, there could be an income tax reduction, offset by the cigarette tax increase."
State Sen. Lewis Vaughn (R) said, "We should reduce taxes in other areas, because I do not support a growing government. I am not opposed to taxing the tobacco industry, but we need to downsize the government."
Governor Mark Sanford favors a 30-cent hike, said the report, with the money being used to pay for an income tax cut.
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