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Tobacco prices increase to record highs

Thursday, April 2, 2009

THAYER -- As of April 1 the largest federal tobacco tax increase ever in history is about to go into effect.

There is already an $8 to $10 difference in the price of a carton of cigarettes between Arkansas and Missouri.

The major cigarette companies raised prices several weeks ago for many reasons. One was to off-set the drop in profits once the per-pack tax goes from 39 cents to $1.01.

Before April 1, Missouri had the second lowest state cigarette tax in the country, 17 cents per pack. The tax at the same time in Arkansas for cigarettes was 59 cents per pack.

Missouri is still four cents per carton below the national average.

This tax increase is all due to President Obama signing the State Children's Health Insurance Program Reauthorization Act of 2009 (SCHIP). The tax will create $32.8 billion across the country to fund the SCHIP program.

Nationally, the state tax rates on cigarettes range from seven cents per pack in South Carolina to $2.58 in New Jersey, according to the Federation of Tax Administration.

Also, the legislation passed raised the tax on many other tobacco products besides cigarettes. The tax on chewing tobacco will go up from 19.5 cents per pound to 50 cents.

On April 1, the cigarette tax across the county took a huge rise by 62 cents per pack.

This means in Arkansas on April 1 the tax increase of 39 cents plus the addition of other taxes on a carton of cigarettes in some stores in Arkansas could be much larger compared to the already increased Missouri tax.

A business owner in Thayer who sells cigarettes admitted that his business sells a lot of cigarettes to people who live in Arkansas. "We have never received anything from the federal or state government saying there has been or will be a tax increase. All our information has come from our distributers," he said.

An Arkansas business owner who smokes cigarettes says she and everyone she knows that smokes buys their cigarettes in Missouri. "I buy generic, the cheapest I can find," she said. "I have also noticed that people I'm around who are sometimes in a hurry that didn't used to have time to smoke a whole cigarette used to just throw them away. Now, they clip off the butt and put them back in their pack," she said.

Another Arkansas business owner who smokes said he always buys his cigarettes in Missouri. "This is the economic thing to do at the moment. Cigarettes cost as much as $90 a carton in Michigan. We have a friend that buys cigarettes in Missouri and sends them one carton at a time to family members in Michigan," he said.

Arkansas law says Arkansans may legally possess one carton plus one pack of cigarettes that don't have an Arkansas cigarette tax. If the value exceeds $100 it's a class C felony with up to three years in prison. If it's less than $100 it's a class A misdemeanor punishable up to one year in jail.

"We have cut down from two cartons to one carton a week. I don't think the cigarette tax should be raised when the federal government is still paying farmers to grow tobacco," the Arkansas business owner said.

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