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Retailers fears cigarette tax hike

June 28, 1999|By JULIE E. GREENE

Some Washington County smokers and retailers said Monday they fear a 30-cent-per-pack Maryland tax increase that goes into effect Thursday will drive smokers to buy their cigarettes outside the state.

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"Obviously I don't like it and I think we'll see a lot more people going across the state line," said Dawk Hollister, owner of Smoker Friendly, a Hagerstown tobacco shop that opened June 12.

Hollister said taxes on a carton of cigarettes containing 10 packs will increase from $3.60 to $6.60.

The tax increase is more likely to affect retailers in smaller cities near state lines than shops in Baltimore or in the Maryland suburbs near Washington D.C., he said.

"It may be a reason for people who were thinking about quitting to go ahead and cross that line and do it," Hollister said.

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Deborah Dagenhart, owner of Bubba's Deli in Hagerstown's South End, said the tax increase "stinks."

Dagenhart said she probably will find herself selling more generic brands since many people no longer will be able to afford the major brands.

If state legislators continue raising taxes on cigarettes so many smokers will quit that the state will lose a source of income, Dagenhart said.

Revenues from the tax hike will go into the state's general fund, and be used for a variety of projects including the University System of Maryland, Hagerstown Center, said Michelle Byrnie, Gov. Parris N. Glendening's spokeswoman.

Byrnie said the tax revenue also will be spent on programs to reduce tobacco use in Maryland, including smoking cessation programs and school-based tobacco education programs.

The details about how much tax revenue would go to each project were not available, but the state estimates the tax hike will increase revenues by $80.9 million in the fiscal year that starts Thursday.

Glendening originally wanted a $1 per pack increase to be phased in over two years, but state legislators opposed such a high increase.

Byrnie said cigarette prices also are increasing because of the national tobacco settlement in which the states receive funds from tobacco manufacturers in exchange for ceasing legal action against the manufacturers.

Maryland will receive $4.4 billion over 25 years from the settlement, beginning in fiscal year 2000, Byrnie said.

The 30-cent tax hike raises the Maryland tax on a pack of cigarettes to 66 cents per pack compared to 31-cents-per-pack in Pennsylvania and 17-cents-per-pack in West Virginia, state officials said.

In West Virginia the per pack tax is 21.25 cents for packs containing 25 cigarettes. Most packs contain 20 cigarettes.

"Because we're so close to Pennsylvania and we're so close to West Virginia, they can go just across the bridge and buy the cigarettes," said Judy Brown, manager of the Hancock BP Convenience Store.

Brown said the convenience store was charging $2.25 for a major brand pack on Monday, but in a week the price will be $2.89 a pack.

Ed Trout, owner of King Street Emporium in Martinsburg, W.Va., said he expects to see some increase in cigarette sales because of the Maryland tax hike.

"Any time it's cheaper people go across the border," Trout said. The Emporium was selling a name brand pack for $2.50 on Monday, he said.

Many West Virginia smokers drive to Virginia to get their cigarettes because they're even cheaper there, he said.

Julee Domer, 21, of Williamsport, said she'll probably drive across the state line to buy cheaper cigarettes or quit smoking to avoid the higher tax.

Charles "Moe" Mozingo, owner of Moe's Sunoco in Williamsport, said cigarette sales always decline for a week or two after a tax increase.

People come in, pay the tax increase and say they'll quit smoking, but then they end up coming back for more, he said.

Mozingo said his regular price for a pack of Marlboro cigarettes will go up from $2.55 to $2.85 on Thursday. They were on sale Monday for $2.20 a pack.

Kristen Schmader, 24, of Hagerstown, said she'll probably cross state lines to support her habit more cheaply and even cut back from smoking a half pack a day.

"I think it will probably help deter the kids from starting," Schmader said.

If the tax had been that high when she started smoking at the age of 15, Schmader said she might not have started smoking.

James Gibbs, 22, of Hagerstown, said the tax increase won't force him to stop smoking a pack a day.

"They can raise the price and I'm still going to buy cigarettes regardless," said Gibbs, who just started smoking again after a three-month break.

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