By By JAMES COLLINS / Niles Daily Star
NILES -- With a new state cigarette tax going into effect on Thursday, Michigan smokers are going to have even more of a reason to run for the border.
Last week, the Michigan State Senate approved a 75-cent per pack increase on cigarettes and other tobacco products. The increase will raise taxes in Michigan to $2 per pack, which is the second highest tobacco tax in the country behind New Jersey.
The bill passed by the Senate indicates that all of the revenues generated from the increase will go to the state's Medicaid program until the 2005-2006 fiscal year. When that fiscal year begins on Oct. 1, 2005, 75 percent of revenues will go toward Medicaid while 25 percent will go to the state's general fund.
This tax increase will cause an even larger differential in cigarette prices between Michigan and Indiana businesses.
Pete Adams, owner of Pete's Marathon in Niles, expects this tax hike to effect all Michigan businesses that sell tobacco products.
Adams said people are going to shop around for the best price, especially when there is such a difference just minutes away across the state border.
Sheryl Farley, assistant manager of the Pop Stop, said she already sees a large number of Michigan customers come across the border to buy cigarettes at her store. She anticipates the new tax will cause even more Michiganders to make the trip to Indiana.
Many of the tobacco outlets located near the border are already prepping for the July 1 increase.
Price estimated that 75 percent of the store's customers come from Michigan and she also expects an increase after the tax hike goes into effect.
She said the price difference between the two states could be as much as $2 per pack and $20 per carton.
Niles resident Barb Smith made a stop at the Smoke Shop to stock up on cigarettes on Monday.
Though she has been travelling to Indiana for cigarettes for years now, Smith would occasionally buy a pack in Michigan.
But, she said that will not happen again with the new tax increase on the horizon.
Niles resident Keith Cawley said he would consider quitting smoking if he did not live right on the border of a state with much cheaper tobacco prices.
Heather Moffitt, a Niles resident and employee of the Smoke Shop in Indiana, said she has received a lot of complaints from Michigan consumers lately.
Moffitt is also anticipating an increase in business at her store after the tax goes into effect.