North Carolina Cigarette Retailers Say New Cigarette Tax ‘Stinks’

Published October 1, 2005

Josie Beasley had an immediate response when asked about North Carolina’s increase in the cigarette tax.

“I think it stinks,” said Beasley, who sells a lot of cartons of cigarettes as manager of Ali’s Discount Food Mart 1 off Carthage Road. “I’ve watched cigarette taxes go up consistently, but beer and wine taxes have stayed the same.”

Others, including smokers and farmers, reacted similarly when told the state budget adds 25 cents to the tax on a pack of cigarettes beginning October 1, making the tax 30 cents. It will rise to 35 cents on July 1, 2006.

Up from 5 Cents

One of the legacies of North Carolina’s long tradition as a tobacco state has been its low tax on cigarettes–it was the nation’s lowest, at 5 cents a pack. Even after the October 1 increase, it will remain on the low end, which is why smokers who travel through Robeson County from other states often stock up.

But they might soon be stocking up in South Carolina. That state inherits the crown of having the lowest tax in the country, just 7 cents per pack.

Advocates of the higher tax in North Carolina include Robeson County Health Director Bill Smith, who has fought for it in Raleigh. He says the higher tax will deter teens from smoking, but Smith doesn’t think the General Assembly went far enough. He would like to see a 75-cent tax, which the Centers for Disease Control say would decrease the number of teen smokers by 17 percent.

“At a quarter, you are barely making a difference,” he said.

Smith expects the tax to barely dent the number of adults smoking. He said teens tend to smoke name-brand cigarettes such as Camels, but adults are more willing to buy a cheaper brand.

Goal Was Revenue, Not Health

Each penny on the cigarette rate raises about $7 million for the state, meaning the 25-cent hike will generate $175 million in additional revenue, money the state says it needs because of chronic budget problems. Advocates of a higher tax say tobacco costs the state more than $826 million a year in Medicaid expenses because of illnesses related to smoking.

Smith criticized the state’s motive, saying the tax hike wasn’t guided by health concerns but instead by a more practical matter. “It’s a step forward,” he said, “but all it came out to was a revenue issue.”

Beasley said the tax will hurt her store’s cigarette sales–but hinted she didn’t think sales would suffer much.

“People will shop around and try and find the best prices,” she said. “But people need it, so they’re going to buy it.

“It’s like gas. When they raised the price, people still bought it because they needed to go to work.”

Heavy Smokers Hurt Most

Beasley said she thought the tax was aimed at people most dependent on cigarettes.

“People that are addicted will buy them,” she said. “They will find the ways and means.”

But Smith would be pleased to hear what Beasley said next.

“I’ll cut back, and if things go the way they are going now, I’ll quit,” she said.

Sammy Ali, manager at Exxon Community Shop No. 4 off Lackey Street, recently moved from New York, where the cigarette tax is $1.50 per pack.

“I personally don’t care,” he said. “When I have to smoke, I have to smoke.”

Hits Poor People Hardest

Ali expects his store’s cigarette sales to drop by about 15 percent. He said the tax will hit poor smokers the hardest.

“In North Carolina, where minimum wage is so low, 30 cents is a lot for people to pay,” he said.

Several patrons of Community Stop No. 4 didn’t like the tax hike. One woman said she would quit smoking, but Ali doesn’t expect a cessation trend.

“People will cut down,” he said, “but they won’t quit.”

Nicholas Oxendine, manager of New Age Tobacco and a tobacco wholesaler, said he feared that instead of quitting, smokers would buy cigarettes in other states.

“I’ve already talked to about 10 customers who said they are going to buy in South Carolina,” he said.

Jonathan Yeomans ([email protected]) is a staff writer at the Robesonian newspaper in Lumberton, North Carolina. This article originally appeared August 17. Reprinted by permission.