Tobacco taxes squeezing smokers and retailers

The double dose of hefty state and federal cigarette tax increases has many smokers poised to quit. It has Jim Narbone looking to sell the inventory of his retail tobacco business.

"This tax is so severe we are actually working on selling down the store now," said Narbone, Bebe's Tobacco (Desoto Square) director of operations.

"Right now I'm probably facing $50,000 to $60,000 in tax; that can break a business."

After being hit with the federal tax increase from 39 cents to $1 on a pack of cigarettes on April 1, smokers are facing what many say will be the final straw - the state tax increase from 34 cents to $1.34 per pack on July 1. That's a $1.61 per pack increase.

Retailers also will have to pay taxes on their inventory on July 1.

Dan Coake started smoking at the age of 16, but he and his wife plan to kick the habit before the state tax increase goes into effect.

Coake said he and his wife smoke two cartons of cigarettes a week.

That, Narbone calculated, is a $160-a-month increase for the family.

"He's retired; in this economy, who has the ability to squeeze $160 a month out of their budget?" Narbone asked. "You have no option; you are forced to quit."

He's not sure how the tobacco industry will evolve with the tax increases.

Before the federal tax increase, people stocked up, but they don't have the money to stock up again before the state tax increase, Narbone said. Electronic cigarette sales are brisk.

Tom Dye of Sebring started smoking an electronic cigarette Saturday.

"All because of the cost, because this is going to help me quit cigarettes," he said. "If the federal government really is putting all this tax on it to get people to quit, then why don't they take that tax money and invest it on things that would get people to quit?"

Fred Blake, owner of the Tobacco Pouch in the Shoppes of Highlands, said everybody says they are going to quit smoking due to the tax increase.

But it's forcing people to go to a less expensive cigarette, he said. Also, some who buy two or three cartoons a week are now just buying one carton a week or single packs.

"It's really going to hurt," he said. "I thought the federal tax was going to take a bite out of it; it did a little bit, but I think this is going to be the final straw for a while."