Cigarette Tax Hike Will Cost Jobs

Ohio group decries 70-cents-per-pack increase

COLUMBUS, Ohio -- The Ohio Council for Reasonable Business Policy (OCRBP), made up of retailers and wholesalers from across the state, outlined the impact of the state Senate's proposed increase of $7 per carton (70 cents per pack) on cigarettes.

Bottom line, this is going to cost 1,900 jobsreal jobs like the guy who sells you your newspaper, coffee and doughnut at the convenience store every morning, said Nate Willison, executive director of the Ohio Association of Convenience Stores (OACS). Small businesses in towns all across the state are in jeopardy.[image-nocss]

The American Economics Group estimates that tobacco sales directly support 12,500 retailer and wholesaler jobs across the state, the group said. More than 55% of Ohio's tobacco sales take place in c-stores, it added. If the excise tax is increased by 70 cents per pack, retailers will lose approximately $805 million in retail sales (230 million packs evaluated at a price of $3.50 per pack) and approximately $233 million in sundry product sales, or products normally bought in conjunction with tobacco products.

There are very real consequences to raising the excise tax even higher than it already is, said Beth Wymer, executive Director of the Ohio Wholesale Marketers Association (OWMA). It was bad enough that the governor wanted to raise it by 45 cents per pack, but raising it to $1.25 per pack will mean that our tax is higher than all of the states around us except Michigan and only $1 per carton less than Pennsylvania, which eliminates our competitive advantage.

If the increased tax is approved, an individual could drive a car across the border into Indiana, buy a trunk load of cigarettes (approximately 1,000 packs), and sell them to friends and family in Ohio for a profit of $700. The profit is even greater when buying the cigarettes in Kentucky, which will have a per-pack tax of 30 cents as of today, June 1the same trunkfull of cigarettes would generate nearly $1,000 in profit, she said.

Organized crime, smash-and-grab robberies, even counterfeit cigarettes have been increasing in Ohio since we raised the cigarette tax previously, Willison said. This is only going to get worse if we increase the cigarette tax even more. That means lost sales, lost tax revenue and lost jobs for Ohioans.

OCRBP is a coalition of manufacturers and trade associations that represent retailers, wholesalers, vending machine operators, entertainment and hospitality venues and others that share common interests with regard to tobacco-related issues and tobacco consumers.