A sad story out of Utah where new tobacco taxes are causing at least one tobacco shop, which has been in business since the 1940s, to close its doors. The increased taxes would be bad enough, but the kicker is that they don’t apply just to new stock. Retailers will have to apply the higher rate to all of the inventory they own, even though they purchased it at the old tax rate. In the case of Jeanie’s Smoke Shop that will add up to about $125,000 due in July. Unable to sell their inventory or raise that much cash by then, they’ll be closing their doors instead. Read the full story here.
One Republican state senator supports the tax and comes up short in the sympathy department:
Sen. Allen Christensen, R-North Ogden, who fought for years to raise Utah’s tobacco tax, said he understood that distributors would have to pay the bill, not retailers. But Charlie Roberts, Utah Tax Commission spokesman, said retailers indeed must pay the higher tax and yes, it will come due when the law takes effect this summer.
“If that’s the way it is, then so be it,” Christensen said. “I’m sorry for some of the businessmen the law will impact, but they’re selling a deadly product.”
He also predicted Jeanie’s Smoke Shop and other retailers “will somehow come up with that money anyway.”
Governor Gary Herbert can still veto the bill, but he probably won’t.