You could soon pay more for cigarettes and other tobacco products. Gov. Tom Wolf (D) hopes it will help the state generate much-needed revenue. Those in the industry believe it will push business and customers out of the state.
Wolf suggested raising taxes on the tobacco industry in his 2015-2016 budget proposal. The proposal includes raising the cigarette tax by $1.00 per pack and also a new 40 percent tax would also be imposed on the wholesale value of all other tobacco products. This would include products such as e-cigarettes, loose tobacco, and cigars.
The cigarette tax increase is estimated to generate $358.4 million next fiscal year (with a partial year of collections beginning October 1, 2015).
The tax on other tobacco products is estimated to bring in $84.1 million in revenue. The money would go toward the general fund, except for about $51.22 million of cigarette tax money that is split between transfers to CHIP and the Agricultural Conservation Easement Purchase Fund.
"I can't emphasize enough that people have to look at our tax plan as a total tax package. We are rebuilding our public schools, we are rebuilding our business tax climate," said Budget Secretary Randy Albright.
Not good for business
Craig Emig is the revenue operations manager at the Smoker's Outlet in York County. He said the tobacco industry is an easy target when the state needs more tax money, but he doesn't think it makes sense.
"It seems counterproductive because if people can't afford to smoke or use tobacco products, they're going to quit or find alternative ways, which means less revenue for the government," said Emig.
Emig thinks the move could also drive businesses and customer out of the state, where taxes are cheaper. "In our industry, stores that are near state border lines, it's going to affect their business quite greatly. People are going to drive 15-20 miles to save $20."
Like many customers, Todd Horner and his wife roll their own cigarettes to save money. "It helps out because it’s cheaper to make our own cigarettes than it is to buy them," said Horner, who estimated he spends around anywhere from $35-$50 a month on tobacco products.
If these tax increases happen, he said he won't save any money at all. "If the cigarettes don't kill me the prices will,"said Horner.
The changes still need approval from the legislature. If approved, cigarette and tobacco taxes would go into effect October 1, 2015.
