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http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20090322_16_A1_Custom315074
By RANDY KREHBIEL AND CLIFTON ADCOCK World Staff Writers
Published: 3/21/2009 2:15 PM
Last Modified: 3/21/2009 2:15 PM
A nicotine fix is about to get a lot more expensive — if it hasn't already.
Whether it's smoked, chewed or placed between the cheek and gum, federal taxes on tobacco products will increase substantially on April 1. Revenue from the tax increase, estimated at $32.8 billion annually, will pay for an expansion of children's health care coverage.
For tobacco users, smokers who roll their own will take the hardest hit. The tax on that type of tobacco will skyrocket more than 20-fold, from about $1.10 per pound to $24.78 per pound.
Taxes on cigarette papers and tubes are also going up — from 1 cent per 50 for papers to 3 cents, and from 2 cents per 50 for tubes to 6 cents.
Industry sources say the increases will virtually eliminate the financial advantage of rolling cigarettes instead of buying manufactured smokes.
"It's been the least expensive way of smoking, but it won't be any more," said Mark Clymer of Ted's Pipe Shop in Utica Square.
Cherokee Nation spokesman Mike Miller said the tribe was unsure what type of effect the increase in tobacco prices would have on licensed smoke shop owners, but that it would not affect tribal government revenue.
"From the Cherokee Nation's perspective, we don't know for certain what impact it might have on tobacco sales, but any decrease in tax revenue generated by tobacco tax will be more than offset in savings on our health care costs," Miller said.
Some prices increased already: Name-brand cigarette
smokers are already effectively paying the 62 cent-per-pack hike on their favorite smokes because the nation's largest manufacturers, including RJ Reynolds and Phillip Morris, jumped prices by as much as 75 cents per pack earlier this month.
Greg Mathe, a spokesman for Phillip Morris parent Altria, said the increases are a "direct response to the federal tax."
Mathe said prices went up to help cover the manufacturer's "floor tax" — the tax Phillip Morris will have to pay on every cigarette in its inventory on April 1. Mathe said prices are not expected to go up again when the new taxes take effect.
QuikTrip's Mike Thornbrugh said by jumping the tax increase, the manufacturers prevented customers from stockpiling cheaper cigarettes.
"They've been caught by surprise," Thornbrugh said.
One of those is Kyle Lessing of Tulsa. Huddled out of the wind against a downtown building during a smoke break last week, Lessing said he had heard about the tax only the day before.
"Our politicians need to work on something besides seat belts and tobacco," he said.
Lessing said he will probably find a way to maintain his carton-a-week habit.
"Nobody who smokes wants to smoke," he said.
Motivation to quit: In fact, research suggests three-fourths of smokers would like to quit. Health professionals hope the tax increase provides the extra motivation to push at least some into cessation programs.
Calls to the cessation hot line funded by the state's Tobacco Settlement Trust Fund increased from an average of 300 to 500 a week to 1,100 in the second week of March, according to Executive Director Tracy Strater.
"For every 10 percent increase in price, we see a 4 percent decrease in use," Strater said. "For youth smoking, it's a 7 percent decrease."
Elizabeth Butler, a Tulsa psychologist whose practice includes cessation treatments, says that while financial considerations can be a powerful motivator, they usually aren't enough — alone — to get someone to give up tobacco.
"It's a strong motivator, but it's not the primary motivator," Butler said. "For most people, quality of life and health are the deciding factors."
Health vs. revenue: The price increase is a double-edged sword for tribes and tribal smoke shops, said A.D. Ellis, Muscogee (Creek) Nation principal chief.
On one hand, higher prices could mean fewer people smoking and fewer health problems among tribal citizens, but on the other hand fewer people smoking could mean a hit to tribal revenue, Ellis said.
"I'm sure the prices will have an effect on people quitting," Ellis said. "I'm all for getting healthy by quitting cigarettes, but it will probably drop our revenue quite a lot, probably also the state revenue from taxes. It's a health issue. I've always said that the money we make off tobacco won't take care of the health of the people (affected by tobacco)."
By RANDY KREHBIEL AND CLIFTON ADCOCK World Staff Writers
Published: 3/21/2009 2:15 PM
Last Modified: 3/21/2009 2:15 PM
A nicotine fix is about to get a lot more expensive — if it hasn't already.
Whether it's smoked, chewed or placed between the cheek and gum, federal taxes on tobacco products will increase substantially on April 1. Revenue from the tax increase, estimated at $32.8 billion annually, will pay for an expansion of children's health care coverage.
For tobacco users, smokers who roll their own will take the hardest hit. The tax on that type of tobacco will skyrocket more than 20-fold, from about $1.10 per pound to $24.78 per pound.
Taxes on cigarette papers and tubes are also going up — from 1 cent per 50 for papers to 3 cents, and from 2 cents per 50 for tubes to 6 cents.
Industry sources say the increases will virtually eliminate the financial advantage of rolling cigarettes instead of buying manufactured smokes.
"It's been the least expensive way of smoking, but it won't be any more," said Mark Clymer of Ted's Pipe Shop in Utica Square.
Cherokee Nation spokesman Mike Miller said the tribe was unsure what type of effect the increase in tobacco prices would have on licensed smoke shop owners, but that it would not affect tribal government revenue.
"From the Cherokee Nation's perspective, we don't know for certain what impact it might have on tobacco sales, but any decrease in tax revenue generated by tobacco tax will be more than offset in savings on our health care costs," Miller said.
Some prices increased already: Name-brand cigarette
smokers are already effectively paying the 62 cent-per-pack hike on their favorite smokes because the nation's largest manufacturers, including RJ Reynolds and Phillip Morris, jumped prices by as much as 75 cents per pack earlier this month.
Greg Mathe, a spokesman for Phillip Morris parent Altria, said the increases are a "direct response to the federal tax."
Mathe said prices went up to help cover the manufacturer's "floor tax" — the tax Phillip Morris will have to pay on every cigarette in its inventory on April 1. Mathe said prices are not expected to go up again when the new taxes take effect.
QuikTrip's Mike Thornbrugh said by jumping the tax increase, the manufacturers prevented customers from stockpiling cheaper cigarettes.
"They've been caught by surprise," Thornbrugh said.
One of those is Kyle Lessing of Tulsa. Huddled out of the wind against a downtown building during a smoke break last week, Lessing said he had heard about the tax only the day before.
"Our politicians need to work on something besides seat belts and tobacco," he said.
Lessing said he will probably find a way to maintain his carton-a-week habit.
"Nobody who smokes wants to smoke," he said.
Motivation to quit: In fact, research suggests three-fourths of smokers would like to quit. Health professionals hope the tax increase provides the extra motivation to push at least some into cessation programs.
Calls to the cessation hot line funded by the state's Tobacco Settlement Trust Fund increased from an average of 300 to 500 a week to 1,100 in the second week of March, according to Executive Director Tracy Strater.
"For every 10 percent increase in price, we see a 4 percent decrease in use," Strater said. "For youth smoking, it's a 7 percent decrease."
Elizabeth Butler, a Tulsa psychologist whose practice includes cessation treatments, says that while financial considerations can be a powerful motivator, they usually aren't enough — alone — to get someone to give up tobacco.
"It's a strong motivator, but it's not the primary motivator," Butler said. "For most people, quality of life and health are the deciding factors."
Health vs. revenue: The price increase is a double-edged sword for tribes and tribal smoke shops, said A.D. Ellis, Muscogee (Creek) Nation principal chief.
On one hand, higher prices could mean fewer people smoking and fewer health problems among tribal citizens, but on the other hand fewer people smoking could mean a hit to tribal revenue, Ellis said.
"I'm sure the prices will have an effect on people quitting," Ellis said. "I'm all for getting healthy by quitting cigarettes, but it will probably drop our revenue quite a lot, probably also the state revenue from taxes. It's a health issue. I've always said that the money we make off tobacco won't take care of the health of the people (affected by tobacco)."
