Federal tax on cigarettes rises 5 cents
WASHINGTON -- Federal cigarette excise taxes are climbing 5 cents per pack, to 39 cents per pack.
The federal tobacco-tax hike, the fourth in 11 years, was signed into law by President Clinton in 1997, but it didn't go into effect until today.
Anti-smoking activists say the tax increase -- which will raise an estimated $1 billion in revenues per year -- isn't steep enough. They are vowing to fight for more tax increases this year.
``This will not be the last tax increase,'' said Campaign for Tobacco Free Kids President Matthew Myers.
``The federal government is facing a budget crisis for the first time in several years. A federal tax increase used to fund tobacco prevention or other critical programs would be a very wise strategy,'' Myers said.
Anti-smoking activists say a steep tax increase would raise billions of dollars and make it harder for teen-agers to afford cigarettes. Teens should be prohibited from buying cigarettes under Kentucky state law, but many still obtain them. Twenty-two percent of Kentucky middle school students and 37 percent of Kentucky high school students say they have smoked at least one cigarette in the last month -- rates well above national averages.
Lexington merchants who sell tobacco products say they doubt that an extra nickel of tax will do much to deter smokers, young or old. They note that smokers already are paying up to $30 or more for a carton of cigarettes.
``They used to say people would stop buying cigarettes when they cost $2 a pack; then they said they wouldn't buy them at $3.50 a pack,'' said Dave Arbra, who sells cigarettes at his Clays Mill Liquor store. ``I don't think price dissuades anybody. People are going to do what they're going to do.''
Bob Zaccarelli, who sells cigarettes at his Southland News Stand, also predicted that smokers won't hesitate to shell out the extra nickel.
``I don't sell that many cigarettes any more, myself, but cigarette stores are making money left and right even though the prices are high,'' Zaccarelli said. ``People are going to smoke no matter what the taxes are. But it's going to be harder on their pocketbook.''
Mark Smith, a spokesman for Louisville-based Brown and Williamson, said smokers ``already pay more than their fair share in taxes.''
Besides paying state and local taxes, smokers are also footing the bill for Big Tobacco's $205 billion settlement with 46 states.
``When you put it all together, it means there's a real unfair tax burden being shouldered by consumers who choose to smoke,'' Smith said.
It might be difficult to convince President George W. Bush to raise cigarette taxes, but there's plenty of precedent. Ronald Reagan raised them; so did Bush Sr.
And a significant number of Americans favor the tax increases, anti-smoking activists say.
They point to Washington state, where voters overwhelmingly approved a 60-cents-per-pack tax increase in November.
Smith said that large tax increases would make cigarettes ``outrageously expensive''; he predicts that people will buy tobacco products on Indian reservations or via the Internet to escape taxation.
Henry West, president of the Burley Tobacco Growers Cooperative Association, said tobacco is already ``heavily overtaxed.''
But many tobacco growers no longer believe their fate is closely tied to the tax rates, he said.
``The manufacturers have demonstrated to us that price increases have not had a very big effect on consumption, not like we used to think it would,'' West said.
``At one time, we marched on Frankfort opposed to (cigarette) taxes, and I don't think you'd see the farmer do that now.''