Yes, tobacco taxes really do kill business

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.

[Via @NoCigTax.]

Comments

  1. Jan says:

    Every state that has increaed its’ tobacco tax rate to this excessive and punitive level has lost revenue. It is criminal for government to intentinally put business out of business with this type of excessive and punitive taxes.

    There was once a day when tobacco shop owners were just another specialty retailer in the mix of independently owned small businesses. Today, these oridinary hard working shop owners are classified as criminals for selling a legal product to adult comsumers. Social engineering cost everyone and benefits no one.

    Today, the smoke shop owner is tagged as the bad guys, but soon it will be the baker, the candy maker and the ice cream shop owner who will be taxed and taxed for selling these legal goods that someone has determined is costing society and therefore must pay and pay and pay until there is no businesses left to pay.

  2. Ed says:

    The law is supposed to address smoking in general, not specialized and unique and more refined smoking that I’m assuming people who have cultivated tastes have made a clear, informed decision regarding their smoking habit and have likely decided to live their shortened life in a rather expensive smoking style unlike the off the shelf customers at the local corner grocery mart. The implementation of the law seems unfair and cruel.

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