With the Arkansas General Assembly having wrapped up last week, one of the major topics legislators battled out was passing an additional sales tax on tobacco products to fund a state trauma system. ACT 180 placed an additional 50-cent tax on each pack of cigarettes and other taxes on tobacco products. The tax is said to bring in $77 million per year to fund a framework of trauma systems in the state.
The state tax began in March, followed by a federal tax, which began April 1.
But with the tax comes a price that one local tobacco store owner said many smokers are not happy with.
Bob Treece, owner of Discount Tobacco Shoppe, voiced his opinion on the new state and federal tobacco tax. “The state tax didn’t affect business too much — the federal tax did,” he said. Treece said the federal “floor tax” called for tobacco stores and distributors to pay $6.20 in taxes for each carton of cigarettes in stock. This caused suppliers to decrease their inventory, which in turn caused his store to run low on stock, he said recently. “We’re still low in stock.”
While he said many customers have complained about the tax, they continue to buy. “A lot of customers have said they are going to quit. So far, very few have. As far as sales go, volume is down.” Before the tax, he said, most cigarette buyers shopped at convenient stores and gas stations. Because of the higher prices at these stores, customers are looking for cheaper retail prices — and Treece said his business has seen an increase in sales “because people are shopping smarter. Actual money hasn’t fallen off, because people are shopping around for lower prices,” he said. “We’re seeing a lot of new faces.”
He shared figures on several products that were taxed. After both state and federal taxes went into effect, cigarettes went up an additional $11.80 per carton — causing many customers to hold off on buying extra cartons. “I have seen fewer multiple-carton sales,” he said. “They’re buying one carton at a time rather than three or four at a time.”
The tax also caused smokers to think cheap in terms of name brand.
“I have seen a lot of people switching off higher-priced cigarettes to buy cheaper,” he said. While sales on some brands like Camel have fallen since the tax, Marlboros have not seen much of a change. “Marlboro customers are pretty loyal,” he said.
Little cigars were taxed over 100 percent of their value, he said, rising from $9.90 per carton before the tax was passed — to $21.70 after. “It will probably put that line out of business.” The product that was hit the hardest was roll-your-own tobacco, which most low-income smokers buy. Rolling tobacco, which is taxed by the pound, rose from $1 per pound to $24 per pound. “It killed that whole industry, basically,” he said.
“We’re not even ordering it anymore.” The smallest increase was on chewing and smokeless tobacco, at 32 percent, with some types up to 68 percent.
He expressed his disagreement with legislators’ vows to bring a trauma center to the state. Officials “have already said they are just going to update existing facilities” rather than building a trauma center.
State Rep. Johnnie Roebuck said the trauma system will not include a facility, but rather link existing medical facilities in a system whose major components will include emergency medical services, designated trauma centers (levels 1-4) located in various locations across Arkansas, a centralized trauma dispatch call center to coordinate patient treatment, a trauma registry, rehabilitation facilities specializing in trauma services, trained and available trauma physicians and nurses and injury prevention and control programs. A 24-member Trauma Advisory Council, upon approval of the State Board of Health, will make recommendations regarding funding to the various components. “The system can reduce trauma mortality by 9-30 percent,” she said, “and will reduce the level of disability associated with traumatic injury. At least 206 Arkansans involved in motor vehicle accidents can be saved each and every year once the trauma system is fully operational.”
Roebuck explained that Arkansas is the only state in the nation without any designated trauma system centers, and is also one of three states in the US without a coordinated statewide trauma system. “The leading cause of death for those between 1 and 44 years old in the US and Arkansas is trauma,” she said. “Arkansas has the third highest motor vehicle death rate in the US, with a 40 percent greater fatality rate than the national average.”
Still, Treece does not agree that smokers should be the only group to pay for the system. “I’m not for targeting a particular group to pay for it,” he said. Other sources of revenue, he argues, could have come from liquor sales, speeding and parking tickets and DWI fines. “It’s an unfair tax put on a select few.”
Roebuck, who voted for the bill when it was in the House of Representatives, said, “My vote for the tobacco tax was a hard one. Raising any tax is difficult, and I carefully weighed all the options in deciding my vote. I heard from constituents who were opposed to the tax and also from those who supported the tax.”
Treece argues that other states have raised taxes on tobacco products with no success. “Several states did this, and the revenue fell off,” he said. “I guess time will tell” how tax revenue will be affected locally.
Another concern Treece had while the General Assembly sorted out the measure was that the general public was not able to vote on the tax. “That was another thorn in (smokers’) side,” he said. “I e-mailed my local representatives and senators before the tax, and got an e-mail back from (US Congressman) Mike Ross. It was just a formal letter — a joke, really. It’s like they turned their back on everybody.”
Ross said he voted on the federal tax while it was in the US House of Representatives to help provide health care for children. “No child should ever go without health insurance or the proper medical care she or he needs to live a healthy life,” he said. “I supported expanding the State Children’s Health Insurance Program, or ‘ARKids First’ as it’s more commonly known here at home, because that meant expanding health insurance to 90,000 additional Arkansas children of working families who are trying to do the right thing and stay off welfare, but are working jobs with no health insurance benefits.” Ross said the federal bill was “fully paid for with an increase in the tobacco tax, which discourages children from smoking. In fact, a recent study by the Campaign for Tobacco-Free Kids estimated that this tax would cause nearly 1.9 million fewer children to smoke.”
Treece, who said he does not support under-age smoking, said smoking is a decision legal-aged people should have the right to make without paying high taxes, and reiterated that revenue could come from other sources. “Smoking is a choice,” he said. “While cancer is dangerous, smokers choose to smoke. It’s not like drinking and driving. If someone is killed because of a drunk driver, it’s not their choice.”
Roebuck argued that the tax will make for a healthier state. “We need to reverse the disturbing health trends in Arkansas and improve overall quality of life for all of our citizens,” she said. In addition to the trauma system, “Arkansas will be able to continue offering Medicaid coverage to low- and moderate-income Arkansans battling breast and/or cervical cancer. The Hunger Coalition, coordinated school health services and Community Health Centers will also receive much needed funding. The funds generated from ACT 180 are also set to expand services for ARKids First to 250 percent of the federal poverty level and give an additional 20,000 children an opportunity to have health coverage.”
Other services to be funded under the system, she said, include providing adult dental care to 128,000 Medicaid clients; drug and alcohol treatment for Medicaid-eligible children and pregnant women; home- and community-based services like Meals on Wheels; and electronic health records for the 750,000 Medicaid clients and more than 7,000 children in the state’s foster care system.
The reason Treece said he believes smokers were chosen to be taxed: “They know they’re addicted,” he said. “I’ve never seen so many people so upset at their elected officials. I think it’s going to cost a lot of them their job.”
Tobacco Outlet, which is owned by a Texarkana company, did not comment.
