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SALT LAKE CITY -- Utah's tax increase on cigarettes and tobacco takes effect this Thursday, July 1. The new $1.70 tax has some store owners concerned about business.
It's not just higher prices store owners are worried about. Some are scrambling to reduce inventory to avoid paying hefty taxes.
Most of all, it's the customer that's going to feel the pinch.
"When I was in college in the '70s, all the guys in the dorms smoked, and we said when it gets to a dollar a pack we'll quit. Well, that was $2.50 cents ago," says Tobacco Store customer Thomas Sowell.
Longtime customers Tobacco Store customers like Sowell are used to seeing price hikes every few years, but this time it's a big one.
"I think it's an unfair tax," Sowell says.
Tobacco Store owner Jimmy Gibbs agrees.
"It's a big jump. It's really too big of a jump. They shouldn't have done it that much," he says.
Gibbs says he sees a lot of customers stocking up before cigarette prices jump on July 1. He says the tax will put a dent in business at first.
"A lot of people have bought cigarettes for a reserve, and so those people won't be coming back for a month," Gibbs says.
State Cigarette Excise Tax rates
| State | Tax | Rank |
|---|---|---|
| Rhode Island | $3.46 | 1st |
| Washington | $3.025 | 2nd |
| Connecticut | $3.00 | 3rd |
| Hawaii | $3.00 | 3rd |
| New York | $2.75 | 5th |
| Montana | $1.70 | 17th |
| <b>Utah</b> | $1.70 | 17th |
Customers will pay, on average, $1.00 more for a pack of cigarettes. A $30 carton jumps to about $41.
Store owners will also have to shell out money for a floor tax -- a lump sum to be paid on their entire inventory.
Fred and Joan Cvar, owners of the Tinder Box in Murray, have already sold a lot of cigars and pipe tobacco at sale price so they wouldn't have to pay so much on the floor tax.
"We found out how fat we really were when we started looking at the situation -- seeing that there were some product we didn't sell a lot of, so there is no reason to be in the humidor," Fred Cvar says.
He says the tax may push people out of state to find premium cigars at lower prices.
"It's kind of a losing proposition for the state," he says.
But Fred Cvar is optimistic about business and hopes his customers will stick around.
"They're going to be paying more for a legal product that's sold legally, and it's a ludicrous thing," he says. "It's really silly, but we'll just go ahead and do the best we can."
Customers will pay a tax of 86 percent -- the 17th highest tax in the nation.
E-mail: aforester@ksl.com
