Posted on 12/09/2006 8:23:24 PM PST by Dubya
AUSTIN — C.O. Drumm is fuming mad, but James Gray is breathing easier.
Both are talking about the $1 increase in the tax on a pack of cigarettes that Texas smokers will start paying Jan. 1 as part of the sweeping overhaul of the state’s school finance system enacted by lawmakers in the spring. It’s the first increase in the state’s levy on tobacco products since 1991 and is expected to generate about $700 million a year until smoking rates begin dropping off, expected in 2010.
Drumm, who for 14 years has owned Smokes Etc. on Alta Mere Drive just south of Interstate 30 in Fort Worth, said he expects to bear a disproportionate share of the new tax burden.
“Business otherwise has been pretty good, but I’m waiting for the pending disaster that’s going to hit us Jan. 2 when we open the doors,” said Drumm, 59. “I’m concerned what it’s going to do to my business, and I’m concerned what it’s doing to our freedom to make choices on how we live our lives.”
Life for Texans will be healthier, said Gray, government affairs director for the American Cancer Society.
“We know exactly what will happen once this tax takes effect,” Gray said. “There will be a slight reduction in cigarette consumption. But more importantly, it will discourage young people who don’t smoke from ever starting. Kids are so much more price-sensitive than adults are, and a dollar per pack is quite significant.” Taxing ‘poison’
State lawmakers had been toying since 2003 with the idea of raising the tax on cigarettes and other tobacco products. Some Democrats, led by state Sen. Judith Zaffirini of Laredo, said a $1 per pack increase could have helped pay for an array of public health and smoking-cessation programs.
The effort met with stiff resistance in the Republican-controlled Legislature until the courts ordered lawmakers to replace the property-tax-dependent school finance system with a plan that would pass constitutional muster. Gov. Rick Perry, who was among those resisting a new tax on tobacco even as the state faced a $9.9 billion budget shortfall four years ago, embraced the idea as part of the school finance package.
“What the governor said was that if the choice was between taxing poison and taxing property, he’d go with taxing poison,” said Perry spokesman Robert Black.
The American Cancer Society predicts that the increase, which will put the state tax at $1.41 per pack, will help persuade about 143,300 adult Texans to give up the habit while helping persuade about 284,000 young Texans from ever lighting up.
But Drumm and several smokers’ rights organizations said the more likely outcome will be to send some smokers to states with lower taxes. Others will turn to the black market or the Internet, where they could avoid the state tax and where, the organizations say, minors can easily get around the age restriction on tobacco sales and where product quality cannot be assured.
According to the Campaign for Tobacco-Free Kids, online sales accounted for 14 percent of the U.S. cigarette market in 2005, and children as young as 11 had a 90 percent success rate when attempting to purchasing cigarettes over the Internet.
Although a recent court settlement has forced some online vendors to hand over purchase records to states so customers can be contacted and forced to pay state taxes, an official with the Texas comptroller’s office said the cost of tracking down online cigarette buyers would likely outweigh the revenue that might be recouped.
Jesse Ancira, associate deputy comptroller, said his office expects black market and gray market cigarette sales in Texas to escalate. And he said that it will be difficult to stop people from circumventing the tax through Internet sales and cross-border purchasing.
“We simply do not have the tools to undertake vast enforcement efforts,” he said. “We are aware of the risk of underground activity, and we will pursue any leads or complaints that come to our attention.” ‘Chipping away’
Gray, of the American Cancer Society, said many smokers and many more would-be smokers might find it easier to quit than to jump through such hoops to avoid the tax. And fewer smokers means that Texas can finally start whittling away at the $1.5 billion a year in Medicaid expenses that smoking-related health problems cost taxpayers, he said.
Drumm, whose Fort Worth store also sells cigars and an array of products for pipe smokers, said the new tax unfairly targets a segment of society that has used a product legally available for centuries.
“The government keeps chipping away and chipping away at our freedoms,” Drumm said. “If they don’t approve of the way we chose to live our lives, they try to tax us into changing the way we live.”
Drumm said most of his customers are aware that the tax increase, which will drive the price of popular-brand smokes from about $35 a carton to about $45, is coming. And many have been stocking up since September.
And those who might not be aware will get a New Year’s Day reminder from the state. Ancira said the comptroller’s office will have enforcement teams monitoring wholesale distributors and retailers statewide Jan. 1 to make sure the new tax is being collected.
“We will be working the holiday,” he said. IN THE KNOW Comparing the states
As of Jan. 1, 2007.
Texas: $1.41 a pack, 16th-highest in the nation
Arkansas: 59 cents a pack, 34th-highest
Louisiana: 36 cents a pack, 42nd-highest
New Mexico: 91 cents a pack, 24th-highest
Oklahoma: $1.03 a pack, 20th-highest
Lowest cigarette tax: South Carolina, 7 cents a pack
Highest cigarette tax: New Jersey, $2.58 a pack
SOURCE: Campaign for Tobacco-Free Kids John Moritz, 512-476-4294 jmoritz@star-telegram.com
Sure will increase traffic into adjoining states, Louisiana especially!
The difference in TAX being what, $21 a carton???
Thee giant sucking sound you hear....
“What the governor said was that if the choice was between taxing poison and taxing property, he’d go with taxing poison,” said Perry spokesman Robert Black"
Isn't this noble of him. Did the idea of cutting spending ever occur to him?
Oh blechh. True, I didn't bother reading the article, but sheesh. This kind of taxing-us-into-political-correctness makes me want to take up smoking pronto!
But outlaw tobacco altogether and lose all the taxes?
Blasphemy !
Look at what's going on in Ohio...
http://www.freerepublic.com/focus/f-news/1751157/posts
Texas: $1.41 a pack, 16th-highest in the nation
Louisiana: 36 cents a pack, 42nd-highest
Not quite. $1.41 - $.36 = 1.05. There's 10 packs in a carton. That's $10.50 per carton in tax. Still worth the drive depending on how much you smoke and how far away you live.
http://www.taxfoundation.org/taxfreedomday/
Quote "Tax Freedom Day® will fall on April 26 in 2006, according to the Tax Foundation’s annual calculation using the latest government data on income and taxes. (Click here to read the full study).
“Tax freedom will come three days later in 2006 than it did in 2005,” said Tax Foundation President Scott A. Hodge, “and fully 10 days later than in 2003 and 2004 when a combination of slow income growth and tax cuts caused Tax Freedom Day to arrive comparatively early, on April 16.”
However, 2006’s Tax Freedom Day is still considerably earlier than it was in 2000, when the economic boom, the tech bubble and higher tax rates pushed tax burdens to a record high, and Tax Freedom Day was postponed until May 3.
" endQuote
And for you smokers, guess when tax freedom day is?
Low tax rates for all,
or we are all going to end up with a tax freedom day in November.
"That was what the politicians were saying when they were proposing and promoting the...(add your own whatever)
_______________________
I just had a brainstorm--with all of the reforms sweeping the nation how about this:
To every ballot in every state add a choice of "ELEMENATE THIS OFFICE' for each and every office voted upon. Maybe we could, at last, vote them out of office.
Problem Solved Easily.
http://www.ryocigarette.com/excelplatinum.html
And the internet.
That's what Ma Richards promised
Michigan began a series of large cigarette tax increases in the 1990s, raising the incentive for illicit trafficking. In 1994 the state raised its 25 cent cigarette tax to 75 cents per pack--a 200 percent hike. Taxes were increased by an additional 50 cents per pack in 2002. The most recent increase took effect July 1, 2005. That was a 75 cents a pack hike, taking Michigan's cigarette tax to its current $2 a pack.
Grow and roll your own.
In 2002, two cigarette smugglers were arrested in an FBI sting. The duo were driving vans of illicit cigarettes from North Carolina to Detroit and allegedly using portions of their profits to subsidize Hezbollah, a terrorist organization in Lebanon with possible links to al-Qaida.
An associate of one of those smugglers, a resident of Dearborn, was arrested in a different operation. He pleaded guilty to smuggling as much as $72,000 worth of illicit tobacco each month to Michigan. According to the U.S. Department of Justice, he gave a portion of his profits to an "orphans of martyrs program" run by Hezbollah to help the relatives of those killed in the group's terrorist operations or by its enemies.
If you live within 75 miles of...almost nowhere in Texas is within 75 miles of anything. Texas is 900 miles across. I used to be in the trucking business and there was a saying, "The sun has riz, the sun has set, and I am still in Texas yet." You can't make it from one side to the other during daylight hours in a day.
I am a smoker and buy my cigarettes from an Indian reservation in NM. I don't pay ANY state taxes.
So what does smuggling cigarettes from NC to MI have to do with buying cigarettes on the internet?
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