Minn. cigarette sales down, tax haul up
ST. PAUL (AP) — Minnesota’s tax increase on cigarettes has dampened sales since taking effect on July 1, just as tobacco sellers and anti-smoking groups predicted would happen.
Early Department of Revenue figures show a sharp drop in demand for the stamps affixed to each pack of cigarettes, Minnesota Public Radio News reported Thursday.
The stamps are proof that state taxes have been paid. Wholesalers and retailers pin the dip on the extra $1.60 per pack tax, especially in border towns. For July, stamp sales fell more than 35 percent over the same month a year ago. For August, the drop was 12 percent.
The department reports that tax collections are up by more than 56 percent anyway, though that figure slightly lags projections used when lawmakers built the tax increase into their newly enacted state budget.
Tax collections on other-than-cigarette tobacco products such as ‘roll-your-own’ tobacco also are up.
Abdul Habit, who works at New Smokes in Maplewood, said customers complain regularly about the tax increase.
“It’s very bad,” Habit said. “It went down, like people (are) cutting back. People who used to buy a carton, now they buy five packs. People who used to buy a pack, now they just ask for single cigarette.”
Minnesota officials knew that demand for cigarettes within the state would fall when the tax went up. They predicted a 30 percent reduction in cigarette consumption.
Anti-smoking groups say the higher cigarette tax is having its intended effect: Getting people to consider quitting.
“It’s pretty striking in terms of the number of web visits of people who are checking out Quitplan.com,” ClearWay Minnesota spokesman Mike Sheldon said. “We’re talking about a 240 percent increase year-over-year. That’s a huge increase and certainly the tax is a big effect of that in making people think about quitting.”
Ross Amundson, co-owner of a candy and tobacco wholesaling company, said his bottom line has taken a hit, too. He thinks the tax has shifted where purchases are made.
“Stores that we sold to along the Wisconsin border have basically lost most of their volume and the larger cigarette stores around the cities here that we sell to, their volume in cigarettes is probably in half,” Amundson said.
In North Dakota, where the per pack tax is $.44 compared to Minnesota’s $2.83, cigarette sales rose by more than 9 percent in August over the same month last year, according to state statistics.