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Smokers red hot over new tax: Fuming!

Posted: Tuesday, April 07, 2009

Kenai and Soldotna may have passed on the recent attempts to ban smoking, but there's no way for tobacco enthusiasts to snuff out the huge increase in federal tobacco taxes that went into effect on April 1.

Photo By Joseph Robertia
Photo By Joseph Robertia
Terry Andrews, owner of Hole-E-Smokes in Soldotna, pulls down empty boxes where pouches of premium brand, loose, roll-your-own tobacco would normally be for sale on Monday. As a result of a hike in federal tobacco taxes wich went into effect last week, Andrews said he is phasing out some of the premium brands.

"For those trying to quit smoking, now may be a good time," joked Terry Andrews, owner of Hole-E-Smokes in Soldotna.

The hike in tobacco taxes aims to fund an expansion to health care for children through the Children's Health Insurance Program Reauthorization Act, but according to Andrews, many tobacco users aren't happy about footing the bill despite the benevolent cause.

"People have known about it since February, but until it hit, they didn't realize how it would affect them. They're not happy, and as a tobacco retailer their letting me know it. I'm getting yelled out by customers that last week paid $1.89 for a pouch of tobacco, but now have to pay $4.60 for that same pouch," he said.

The pouches Andrews was referring to are considered loose, roll-your-own tobacco, which as a result of the tax increase saw a 2,000 percent tax hike.

"It went from $1.10 to $24.78 per pound. That's huge and really hurts a lot of people, especially while they're already struggling with the economy," he said.

As a result, Andrews said he will likely begin selling loose tobacco in smaller portions that he has. He may also phase out certain sized quantities of some of the more premium brands, which are now too expensive for him to buy and sell.

Patricia Patterson, owner of Lucky Raven Tobacco in Soldotna, said her business will also have to adapt to the new tax hikes.

"I've already laid off one person, and large bags of roll-your-own was 30 percent of my business, but now I'm getting out of it. I'll keep pouches, but for large bags I'm advising people to buy it direct, off of the Internet," she said.

Patterson said it wasn't just a matter of the federal tax that was hurting her business, it was also the way Alaska taxes other tobacco products besides cigarettes, such as loose tobacco.

"It's not just this federal tax, it's Alaska's tax on that tax. In Alaska, that $24.78 is actually $52 to $85 a pound, depending on the brand," she said.

Since loose, roll-your-own tobacco was a product many smokers have until now preferred as a bargain, Patterson said the new hikes are kicking people that may already financially down on their luck.

"Roll-your-own customers are typically low-income people that can't afford to buy cigarettes, so this really hurts them. If they were going to go after someone, they should have gone after the guys buying $19 cigars," she said, drawing attention to how the tax varies among tobacco products; the price of a cigar only rose by 40 cents.

"This hits the average Kenai Peninsula smoker very hard. Smoking may be addictive, but you get to a point where if you can't afford it, you just can't do it," she said.

Jimmy Chips, a customer at Hole-E-Smokes, will continue to smoke, but he summed up his feelings on the tax hike while purchasing a tobacco product on Monday.

"Everything keeps going up, but wages," he said.

Joseph Robertia can be reached at joseph.robertia@peninsulaclarion.com.



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