NY Tobacco Tax Hike a 'Disaster'
ALBANY, N.Y. (AP) - The near doubling of New York's cigarette tax to a highest-in-the-nation $1.11 a pack has been a disaster for small retailers, a business group says.
Stores are reporting drop-offs in cigarette sales of 30 percent to 60 percent since March 1, when the state added 55 cents a pack to the old 56-cent-a-pack cigarette tax, said Jim Calvin, executive director of the Albany-based Association of Convenience Stores.
Cigarettes are typically the single biggest sellers for such stores, accounting for a quarter to a third of income, Calvin said.
``It's hurting them, without a doubt,'' agreed Mark Alesse, head of the state chapter of the National Federation of Independent Business. ``They are seeing sales drop off, particularly stores near Indian reservations.''
Stores on Indian reservations in the state do not have to charge state sales tax, so they can offer cartons to customers for as much as $13.50 less than non-Indian retailers.
Calvin said retailers close to Pennsylvania also are suffering. Pennsylvania's cigarette tax is only 31 cents a pack, meaning New York smokers can save $8 a carton by crossing the state line.
Part of the revenue from the increased New York tax is earmarked for a health insurance program for the poor. But while the tax per pack nearly doubled, lower purchases mean revenue is up only about a third - to $303.8 million from March through June of this year vs. $209.6 million for the same period last year.
Anti-tobacco advocates had predicted that the ``sticker shock'' from the tax increase would lead some people to quit smoking.
But Calvin said he doubts that anything like a quarter to a third of the smokers in New York have quit just because of the tax price hike.
``If it were a case of people gradually quitting smoking, I think our industry could adapt to that,'' he said. ``But the loss of business has occurred overnight and you will never convince me that that many people quit smoking that fast all at once.''