Monkeying Around With Cigarette Taxes in Iowa

Sales drop follows cigarette tax increase

DES MOINES, Iowa -- Iowa's $1-a-pack cigarette tax increase has cut sales by up to 30% and has tripled the volume of calls from smokers trying to kick the habit since the price spike took effect more than six months ago, state officials said, according to The Gazette.

All the information we've gotten is that virtually everything that we thought would happen has happened, Chuck Reed of the American Cancer Society's Iowa chapter told the newspaper. I think that just shows that people do want to quit smoking, and the tax has brought about a lot of that [image-nocss] because it's very expensive now to buy a carton of cigarettes.

Mike Lipsman of the state Department of Revenue said the number of packs of cigarettes sold in the last three months has declined by an average of about 30%, with much of that attributed to a drop in demand but also some slippage caused by people buying cheaper products in bordering states or via the Internet, said the report.

That's about what we estimated, said Lipsman, who noted that 246.3 million packs of cigarettes were sold in Iowa last year, a figure that is projected to drop to 190.5 million this year and to 186.6 million in 2008.

State receipts from the $1.36 tax on a pack of cigarettes that has been collected since March 16 have jumped dramatically, the report said, with the first three months of the fiscal year that started July 1 posting a 157% upward spike.

Also, calls to the quitline operated by the Iowa Tobacco Research Center at the University of Iowa have increased from 1,515 during the March-to-August period of 2006 to 5,050 for the same six-month period this year, the report added. That's a monthly average increase that's gone from 252 to 842.

We're pleased to see that, said Aaron Swanson of the state Department of Public Health. That shows people are interested in quitting.

Iowa Governor Chet Culver, who campaigned hard to raise Iowa's 36-cent-per-pack cigarette tax by $1, said he was thrilled by the prospects that up to 20,000 Iowans could quit using tobacco products as a result of the state legislature's action and his signature. If people quit smoking entirely, that would be a great thing, he said.

He said Wednesday he would like to see the debate shift to further restricting smoking in public places to address harmful effects of breathing secondhand smoke. I do believe that we will have a spirited debate and discussion about either local control and/or a state ban during the 2008 legislative session, Culver said.

I think getting the tobacco tax in place, finding the money for smoking cessation programs was really the first step and I expect this will be revisited next session and I look forward to getting something done related to some sort of smoking ordinance, he added. I've been for local control all along, and I think that's certainly a good place to start.

Debbie Schnyder, the Iowa supervisor of Cigarette Outlet stores, said because Cedar Rapids is in the center of the state, that store's sales aren't down like shops on the fringes of Iowa. Everyone who came to our state [to buy tobacco] have all gone back to their own state, and everyone on the border in Iowa is now going to other states, she told the Gazette.

But stores in Iowa City said the increased tax has driven away customers.

I just don't think people want to spend the money, Michelle Haigh, the manager of Johncy's Convenience Store, told the paper. A lot of people can't afford it.

At John's Grocery in Iowa City, store manager Doug Alberhasky said tobacco purchases are down 7% this quarter. The store, though, brought in 12% more money from tobacco for the quarter, he told the paper. Basically, we are selling higher-priced tobacco, and we are selling less of it, Alberhasky said. Whenever [lawmakers] monkey around with taxes, that usually is the case.

Separately, NASHVILLE, Tenn. --

Tennessee's top tax collector said border enforcement of the newly increased cigarette tax is working. Revenue Commissioner Reagan Farrtold the Associated Press that a surveillance program has driven down the number of people going across state lines to bring in smokes that cost less.

Cigarette taxes are lower in all eight states that border Tennessee, now that the state legislature tripled the levy to 62 cents per pack.

But the enforcement program has been sharply criticized by State Representative Stacey Campfield (R), who said it is being compared to Gestapo tactics.

Agents stake out tobacco outlets along borders and contact officers who then arrest people coming into the state with more than two cartons of cigarettes.