By ANDREW WELSH-HUGGINS
The Associated Press
9/20/02 6:08 PM
COLUMBUS, Ohio (AP) -- Linda Harley, a pack-a-day smoker, doesn't need state statistics to tell her people are still buying cigarettes despite a new 31-cent tax.
"I need my cigarettes," Harley, a data entry clerk in downtown Columbus, said Friday as she smoked a Salem during a lunchtime break. "If you're going to buy your cigarettes, it doesn't matter how much they cost."
Ohio earned about $81 million from its new cigarette tax in July and August -- about $6 million more than expected, the Office of Budget and Management announced this week.
Tim Keen, assistant budget director, said the news was good but it's too early to tell if the trend will continue through the year.
Lawmakers approved the 31-cent increase in June to help balance a $1.9 billion deficit. The state estimated the increase, which put the total cigarette tax at 55 cents, would earn an additional $224 million annually.
Opponents of the tax said it would drive smokers to border states where taxes were lower. That theory was never entirely tested because Indiana, Michigan and Pennsylvania all raised their cigarette taxes around the same time.
The result was that the tax's negative impact still hasn't been felt, said Josh Sanders, spokesman for the Ohio Council of Retail Merchants.
He said the exception is Kentucky, which has a 3-cent cigarette tax. He said Cincinnati stores are continuing to lose sales to Kentucky businesses, although he didn't have statistics.
Sanders said Ohio will lose sales as people turn to cheaper cigarettes offered over the Internet.
But the increased revenue reported by the state defeats the Internet argument, said Larry McAllister, president of the American Lung Association of Ohio.
The association supported the tax and doesn't believe the Internet will cut into retail sales of cigarettes in Ohio.
McAllister attributed the increased revenue to a documented rise in youth smoking that happened before the tax took effect. He predicted the tax will discourage teens from buying cigarettes.
McAllister said his association will push for the tax to be increased again. "Every time it goes up, we have a reduction in youth smoking," he said.
In Michigan, lawmakers raised the cigarette tax 50 cents, to $1.25 a pack beginning Aug. 1. That lessened the impact of the tax in the Toledo area, said Robert Richard, who owns 11 stores along the state line.
"It has not had a great effect because Michigan has had an even higher increase," he said.
Bob Jonas, owner of Ritze Marathon in Cincinnati, said Ohio's tax hasn't hurt his sales of cigarettes, which he sells for about $4.10 a pack.
People complain, "but they keep digging money out of their pocket and buying them," Jonas said.
But Jerry Ruberg, owner of Quencher Drive-Thru, also in Cincinnati, said his sales of cartons have dropped almost 30 percent since the tax took effect. Customers say they can buy cartons $10 cheaper in Kentucky, Ruberg said.
"It's a gold mine for Kentucky," Ruberg said.
It sure is, but they are about to kill the goose that laid the golden eggs. Smuggling ang web buying is just now picking up steam.