Florida - tobacco sales down in wake of new tax..

September 8, 2009 - As of July 1, 2009 Florida's new cigarette tax is $1.34 per pack. The latest figures from the Florida Department of Business and Professional Regulation show a 28-percent drop in the sale of cigarette packs from July 2008 to July 2009 — 76.8 million packs sold this year compared to 106.6 million packs a year ago.

Sales are also down from June, the month before the buck-a-pack increase was added, 17 percent less in July than June, when 92.9 million packs were sold.

The state's convenience stores, where most cigarettes are sold, and where tobacco makes up 34 percent of non-gasoline sales, are already feeling the sting, said Jim Smith, head of the Florida Petroleum Marketers and Convenience Store Association. "Indeed, my members in the northern part of the state have seen reduced sales of 30 percent," he said. "You are going to see layoffs. I think that's going to come. Sooner or later, something's got to give."

But Florida's loss has also been Georgia's gain. A 15-minute drive from Tallahassee, and a few miles north of the Georgia line, Florida smokers have been crowding the parking lot at Huds III convenience store and Texaco station in tiny Beachton, where cartons of premium cigarettes are $8 to $12 cheaper.

Health advocates, who have been championing tobacco-tax increases for years, are thrilled. The advocates point to studies, including a 1998 market analysis by Credit Suisse First Boston Corp., that show that for every 10-percent increase in price, overall smoking declines by 4 percent. Tobacco use among kids drops 7 percent, the advocates claim.

But the promise of $900 million a year in new state revenue proved too tempting for even the staunchest anti-tax conservatives who were scrambling to fill a $7 billion budget hole.

Tracking down Internet tobacco sales.. To make sure that Florida squeezes as much revenue as possible out of the new tax, lawmakers for the first time ordered regulators to begin tracking down Internet tobacco sales. Department of Business and Professional Regulation press secretary Alexis Antonacci Lambert said administrators are hiring seven people to begin the hunt, but she declined to say what strategy the state will use. "The goal of our investigators is to bring everyone into compliance," she said. Lambert said the department is not aware of increased smuggling activity or truck hijackings.

Jerry McDaniel, Gov. Charlie Crist's budget chief, said he was studying the numbers. It's too early to determine if the new tax ($900 million a year) will hit the projected revenue mark, he said. Amy Baker, the Legislature's chief economic forecaster, said the picture will be in sharper focus in the fall.

Reference: Tobacco sales down in wake of new tax by Jim Ash, Tallahassee.com, 9/7/2009.

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