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February 4, 2008

Proposed cigarette tax

Proposed cigarette tax increase may leave smokers, businesses wishing lawmakers would ‘butt’ out

Times-Tribune / Staff and Wire Report

At a tobacco store on the Kentucky-Tennessee border, business was non-stop Saturday.

If a proposed hike in the state cigarette tax goes through, business may not be as good for those border stores.

State Rep. David Watkins, D-Henderson, said he plans to introduce legislation on Friday that would raise Kentucky’s tax on cigarettes from 30 cents to $1 a pack.

The Legislative Research Commission estimates that the measure could generate an additional $205 million in tax revenues. The state currently receives $165 million a year from cigarette sales.

The change could bring serious repercussions to businesses and smokers alike on both sides of the border.

Janelle Malone, of Jellico, said she and others she knows may not quit smoking if taxes go up, but would change where they buy their cigarettes.

“I have friends who drive in from LaFollette (Tenn.) every couple weeks and buy a carton or two,” Malone said. “I know a lot of business here comes from Tennessee. It is (enough of) a difference to make the trip.”

Heather Brown, an employee at Pit Stop Tobacco in Jellico, said most of the customers come from Tennessee where cigarettes cost more.

“Our biggest competition is Fast Trax and they’re in Tennessee,” Brown said. “(Customers) always say cigarettes are 20, 30 cents higher over there.”

Watkins, a physician, admits he has an ulterior motive for pushing for the tax hike. He hopes the higher price of cigarettes will cause people to stop smoking, especially teens.

Anti-tobacco groups are urging lawmakers to support the tax hike as a way to help offset a shortfall of nearly $900 million over the next two years that has forced cuts throughout state government.

“Raising the price of cigarettes is the single most effective way to prevent smoking, especially among teens,” said Tonya Chang, a lobbyist for the American Heart Association. “Dr. Watkins’ bill would have a major public health benefit.”

In a state where more than 25 percent of residents regularly light up, the proposal has an army of critics.

At Bo’s Smoke Shop in Lawrenceburg, manager D.J. Webb said lawmakers would create a financial hardship on most smokers by raising the tax.

“People like me who make under six digits a year can’t afford it,” Webb said. “But I don’t care how poor you are, for some reason, you find enough change to buy that next pack of cigarettes.”

The most popular brand, Marlboro, sells for $2.99 a pack at Webb’s tobacco store. The proposed increase would push the price to $3.69 a pack, and well beyond $30 for a carton.

The cheapest generic cigarettes, now $2.05 a pack, would go for $2.75 cents if the increase is approved.

“I’m very against this tax increase,” Webb said. “People aren’t going to quit smoking. If they can’t buy them, they’re going to steal them. All they’re doing is creating another criminal and another angry person.”

Until 2005, Kentucky’s cigarette tax was 3 cents a pack, the lowest in the nation. With the state’s finances in shambles, Watkins believes the time is right for another hike.

“I think it has a good chance,” he said. “But having said that, whether I will get this large an increase, I don’t know. I’m going to push for as large a one as I can, because the larger it is the better the results will be.”

As of Thursday, 13 House lawmakers had signed on as co-sponsors of Watkins’ measure, including budget committee chairman Harry Moberly, D-Richmond. Even so, Watkins said he’s not certain the increase has enough support in the House to pass.

And if it does get through the House, Senate President David William’s said the proposal may get no farther.

“I see very little support for any tax increases,” he said.

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