Despite the new federal cigarettes tax comes into force next week, smokers have already been suffering form the price increase that came out of blue and lightened their wallets.
The increase that makes up more than 150 percents would provide health insurance for children from low-income families.
However, leading cigarette manufacturers did not hesitate to raise prices for their products.
Philip Morris, Marlboro cigarette and Virginia producer raised the price by 71 cents per pack in order to cover 62-cent-tax increase.
R.J. Reynolds Tobacco followed the main rival’s steps by increasing prices on key brands by 44 cents and removing discounts.
Cigarette manufacturers’ price hikes have made retailers and especially smokers furious because they had to spend more money on cigarettes even before the tax actually comes into effect.
”Paying this price for cigarettes, I feel like I am being robbed by the tobacco companies, ” complained Barbara Schleps, 51, an architect from Sacramento who used to smoke 10 cigarettes each day before feeling that the cigarettes severely lighted up her wallet.
Producer and importers of tobacco products including cigarettes are obliged to pay the excise tax to the federal government. They render their expenses on their wholesale prices directed to retailers who in their turn handle these prices to ordinary customers, adding as well their profits.
At the mean time smaller tobacco companies like the Dosal Tobacco decided to leave the prices for their brands on the same level until April, 1. And they seem to gain much more benefits from this decision, because smokers seeing the incredible prices on their favorite Marlboros and Camels simply switch to less expensive brands, like those that Dosal Tobacco produces.
The chairman of Florida-based Dosal Tobacco that emerged to become the third-largest cigarette manufacturer in the US thanks to its discount brands like 305’s and DTC said that according to sales reports 305s have become the best selling brand in Florida.
He also stated that cigarette industry tycoons hiked the prices driven by greed and the desire to grab as much money as they can in anticipation of inevitable sale declines due to excise tax increase.
In response to the declaration of Dosal Chairman, Philip Morris’ spokesman said that those are simply rival’s intrigues denying that the company has increased the costs three weeks prior to federal tax taking effect in order to collect extra revenues.
He insisted that Philip Morris had to raise prices because they have to deposit money in order to pay the cost of the upcoming taxes for the cigarettes that have already been passed to their distribution system but would come into market after April, 1.
Industry experts estimated that cigarette sales would go down by almost 8 percent.
The forthcoming tax increase would be applied to other tobacco containing products as well. Tobacco for rolling and chewing, snuff, and cigars would also become more expensive pleasures in several days. For example, the excise tax on cigars would jump to 40 cents each cigar from the current 5 cents.
”With current economic downfall people will simply search for existing options: online tobacco stores or tax-free Indian made cigarettes,” complained Aisha Patel, sales manager of Crocodile Bay Smoke shop in Opa-locka.
At the same time many states including Florida are introducing new bills in order to increase state taxes on cigarettes. The reason is simple they need additional revenue to cover budget holes.
Providing that those bills would be approved, the price of Camels in Florida stores would jump to more than $5 per pack.
Smokers have already begun fuming about possible state tax increases. “When do they stop torturing us?” asked Julia Nunez, 35 lawyer while smoking outside her office in Jacksonville. ”If my cigarettes rose to five dollars I would give up for sure,” she said.
Other smokers, such as Miami Dade engineer Don Hirsh, admitted they would simply buy cheaper cigarettes.
Hirsh said he has already bought a pack DTC cigarettes to try them because they cost much cheaper than Kools he has been smoking for 20 years.