Business

it's a drag

Sahar Nasir says many customers at her Up In Smoke tobacco shop in Lexington are switching to cheaper and cheaper cigarettes to save money as big tobacco tax increases get set to kick in Wednesday.

"People who used to smoke Marlboros are moving to Kentucky Best; people who used to smoke Kentucky Best are switching to Berley," Nasir said Monday. "Everybody's looking for the cheapest thing they can find."

Meanwhile, clerk Dee Bright said customers coming into Fayette Cigar Store on Main Street are stocking up on smokes in anticipation of the coming tax boost.

"People who normally buy a pack will buy four packs; people who normally buy a carton ask for two cartons," she said. "It started last week, but I've really noticed it today. It probably will really take off on Tuesday."

Legislation passed by the Kentucky General Assembly last month doubles the state tax on cigarettes to 30 cents a pack starting Wednesday. That boost coincides with a 62-cent federal tobacco tax increase. Together, the increases will tack 92 cents onto the cost of a pack of cigarettes in Kentucky.

The state legislation also applies a 6 percent sales tax on retail alcohol sales in Kentucky starting Wednesday. The state tobacco and alcohol tax boosts are projected to raise more than $150 million in fiscal 2010 to help stave off state budget problems. Some officials also say the tobacco tax increase will benefit Kentuckians' health by discouraging smoking.

But the news isn't going over well with many who will be paying the higher taxes, particularly the cigarette levies.

James Carroll bought two cartons of cigarettes at Up In Smoke on New Circle Road on Monday, paying more than $40. He said he'll have to pay a lot more after Wednesday's tax increases.

"The prices now, I'm not happy with them. And I'm not happy that they going to go up more, either," Carroll said. "It's outrageous."

But Charlotta Brunson, who was at Up In Smoke to buy a soft drink, was more philosophical.

"I know the higher taxes will make it hard on smokers and people who make a living selling tobacco products," Brunson said. "But as a reformed smoker, I think anything that gets more people to quit smoking is good."

Up In Smoke owner Nasir said she has noticed more and more of her customers buying cigarettes with credit cards — a sign that many smokers already are struggling to support their habit in a declining economy.

"I know Kentucky has budget problems," she said. "But people are still going to smoke. It's going to be hard on them. And I worry about my own business. This is how I pay my bills."

In recent years, rising per-pack prices have caused many smokers to switch to roll-your-own cigarettes. But that won't help much now. At the Fayette Cigar Store, Dee Bright said that under the new tax increases, a 1-pound bag of roll-your-own-tobacco that costs $16.95 now will rise to $41.73.

Fayette Cigar Store owner Dale Ferguson said higher taxes probably won't hurt his sales of expensive cigars. He's less sure about cigarette sales.

"I've been in this business 53 years, and this is the most punitive tax against a single industry I've ever seen," Ferguson said. "A tax has to be reasonable. This goes beyond reason."

  Comments