Smokers stock up before tax hike

Smokers flooded local tobacco retailers Wednesday to stock up on cigarettes in advance of a $1.60-per-pack state tax increase set to go into effect today.

Carol Malik, manager of Smokers Choice on Route 30 in Amsterdam, said far from hurting her business, the tax increase has spiked demand for cartons of cigarettes, at least in the short term.

“This whole week has been crazy. I’ve just been overwhelmed by people coming in to buy cartons and cartons,” Malik said. “We set a five-carton-per-customer limit to make sure we had supply for every customer’s demand.”

Malik said such run-ups have been typical prior to tax increases in the past and she isn’t certain how the tax increase will affect long-term demand. She said Wednesday a typical customer at Smokers Choice was spending as much as $500 on cartons of cigarettes. Similar sales were reported at the Smokers Choice in Johnstown.

“Some customers are even going off brands because I’ve completely run out of some of them,” Malik said.

The tax increase was passed into law last week and raises state taxes per pack from $2.75 to $4.35, increasing the cost of cigarettes per pack from about $7.60 to $9.20. For some brands the price will be more than $10 per pack. The tax increase makes New York state the most expensive place to smoke in the U.S.

The tobacco taxes are expected to be a big revenue raiser for the 2011-12 budget, which was due April 1.

Linda Scott, the owner of tobacco retailer Orion Boutique at 169 Jay St. in Schenectady, said she thinks the tax increase will backfire on the state as more smokers either smoke less or buy cigarettes in other states.

A pack of cigarettes sold in out-of-state border towns ranges from about $6.45 to $7.85.

“We won’t really know the impact for this for the next several weeks. People seem to know this is coming and I’ve had some extra people coming in,” Scott said. “More people have been going to the roll-your-own cigarettes, which I think will still be cheaper, but taxes are going up on those, too.”

Starting Aug. 1, the tax rate on cigars and all tobacco products, other than snuff and little cigars, will jump from 46 percent to 75 percent of the wholesale price. Little cigars will switch from being taxed at the wholesale rate to the same retail rate as cigarettes. The tax rate on snuff will increase from 96 cents to $2 per ounce.

Kyle Kommer, whose family owns James & Sons Tobacconists in Saratoga Springs, said the increase in cigar taxes couldn’t come at a worse time for his business — right at the start of track season.

“We’re absolutely dreading this,” he said.

Kommer said when the state increased its tax on tobacco products from 37 percent to 46 percent, his business was forced to slash the cost of boxes of cigars by 30 percent in order to compete with cheaper cigars available on the Internet. He said his business can still make money on the sale of boxes with the discounts, but he isn’t sure what will happen when the 75 percent tax rate hits.

“We’ve seen our cigar prices go up tremendously. We used to rarely discount our boxes. Now when somebody buys five or more cigars we’re giving them 10 percent off. That was never the case before,” he said.

Besides the last-minute run on retailers, it remains to be seen how the taxes will affect consumer behavior.

James Speth, 22, of Schenectady, said he buys about nine packs of cigarettes a week. He said he works as a pizza chef in Schenectady and Albany and he can’t afford to spend upwards of $360 a month on cigarettes, but he won’t quit. He’d rather move out of New York state and is actively looking for a way to do so.

“They’re basically going after the lower classes with these taxes. It’s a disease to be addicted to something, and they’re taxing us for being diseased,” Speth said. “I’ve basically wanted to move out of New York state for the past two years, since they started raising the taxes on everything. I don’t think it’s right how much control the state is putting on us. I’d rather move to someplace like Georgia with lower taxes.”

Malik said she believes the roll-your-own option will become increasingly popular, which might cause the state to lose money on the tax increase.

“People are transferring right over. If you like Marlboro, obviously it does not matter what roll-your-own you pick, you’re not going to get the normal Marlboro flavor, but you’re going to get something very close. If you’re not willing to quit, that’s the way to go,” she said. “A carton of Marlboros are $73.95, and with roll-your-own you can get a carton for about $15.”

Categories: Schenectady County