75 cent tax hike on cigarettes?
Published 9:20 am Thursday, March 25, 2004
By By JAMES COLLINS / Niles Daily Star
NILES -- There is a reason you can't find a tobacco outlet in Niles.
Yet, just across the state line in Indiana, they are abundant.
The significant difference in cigarette taxes from Michigan to Indiana has created a huge market for Michigan smokers to go south of the border for their cigarettes.
And with another proposed cigarette tax increase, the smoke shops that dominate the state line could see an increase of even more Michigan consumers.
Mich. Gov. Jennifer Granholm recently proposed a 75 cent cigarette tax increase to help balance the budget and to address the funding of health care programs and Medicaid.
And, a recent poll of Michigan residents indicates a majority of voters support a new cigarette tax of 75 cents per pack.
That number does not include State Sen. Ron Jelinek, R-Three Oaks, who opposes the cigarette tax increase and is unsure if it will make it through the House and Senate to become law.
He said if it were to pass, the increase would come into effect by Oct. 1.
With our proximity to the Indiana border, Jelinek thinks another increase will motivate even more Michiganders from all over the state to go south for their tobacco needs.
He said these trips to Indiana could lead to economic losses in other areas of business for Michigan as well, as people eat out at restaurants, go shopping and fill their cars with gasoline.
Jelinek said if the increase takes place it, will give Michigan the second highest tobacco tax in the country.
He also said there is currently a push to hike the proposed increase up to 81 cents per pack, which would make Michigan the highest in the country at $2.06 of taxes per pack.
Bill Nichols, manager of Harding's Market, 407 Broadway in Niles, said the past increases have already affected cigarette business in Michigan and another increase would decrease their sales even more.
Nichols thinks the proposal is the wrong strategy for raising tax revenues.
Nichols, who quit smoking more than five years ago when the price got up to $3 per pack, does not think the continued increases will cut down on smoking, saying the smokers would have already quit with the past increases.
Jelinek agrees the tax increase will not necessarily cause smokers to quit, pointing out there was no considerable decrease when the tax was raised to 50 cents per pack.
Maha Najar, owner of the Smoke Shack, 50629 U.S. 31 in South Bend, Ind., said a majority of her customers already come from Michigan and another tax increase would mean even more business for the smoke shops just across the border.
Niles resident and Smoke Shack employee Amy Luster is one of the customers who has been buying her cigarettes in Indiana.
Luster occasionally buys cigarettes in Michigan out of convenience, but said she may not do that anymore if the taxes are raised again.
Peggy Hooper is another Niles resident who prefers buying cigarettes in Indiana.
She said a pack of cigarettes that goes for $3.95 in Michigan currently goes for $2.65 in Indiana.