Wisconsin cigarette tax goes up Tuesday

Wisconsin's cigarette tax will go up 75 cents per pack on Tuesday, making it the fifth-highest tax in the country and the most expensive among neighboring states.
Securing the higher tax was part of a one-two punch secured by anti-smoking advocates this year. The other was convincing the Legislature to pass a statewide anti-smoking ban that takes effect on July 5, 2010.
Those who fought for the ban and the tax increase say it provides those looking to quit, like Maurice "Moe" Bird of Waterloo, with more motivation.
Bird, a 41-year-old auto mechanic, used to spend about $30 a week on cigarettes before he quit about two years ago. But a few months later he started smoking cigars, which now cost him about $15 a week.
Bird said he's going to use the new tax increase as a reason to stop smoking cigars cold turkey."I basically can't afford it," he said of his habit.
The latest increase, taking the state tax to $2.52 per pack, comes less than two years after a $1 per pack increase in 2008. In April, federal cigarette taxes went up 62 cents to $1.01 per pack.
Taxes on other tobacco products are also going up Tuesday in Wisconsin. The chewing tobacco tax goes up to 100 percent of the manufacturer's wholesale price and the tax on other tobacco products, including cigars and pipe tobacco, goes from 50 percent to 71 percent of the wholesale price. The amount of the tax will vary depending on the price of each product: the cheaper the tobacco or cigar, the less the tax. However, the tax on cigars is capped at no more than 50 cents per cigar.
"There's a lot of folks who attempted to quit when the dollar increase went up and they might not have been successful," said Maureen Busalacchi, executive director of SmokeFree Wisconsin. "This gives them another impetus to try. We know the more you attempt to quit, the more successful you will be."
Don Marx, a 65-year-old retired elementary school gym teacher, said he quit smoking in 2006 after developing throat cancer. Once he quit, Marx decided to put the $120 a month he had been spending on cigarettes into a separate savings account. He's tapped the fund four times since to take golf trips to Myrtle Beach.
Marx said he supports the tax increase and hopes it motivates others to follow his example.
"If anything it's going to hurt the kids who are starting to smoke," he said.
Nationwide, the average price for a pack of cigarettes is $5.12, according to the Campaign for Tobacco-Free Kids. Wisconsin's cigarette taxes will go from 16th to fifth highest on Tuesday.
While health advocates are heralding the increase, it presents a problem for retailers in businesses along the borders where cigarette taxes are much lower in neighboring states. The per-pack tax is just 98 cents in Illinois, $1.36 in Iowa, $1.50 in Minnesota and $2 in Michigan.
Groups representing Wisconsin grocery and convenience stores, along with gas stations, estimate that the tax increase will cut 25 percent to 40 percent of their non-fuel sales. Ironically, many of the stores are replacing the revenue lost from tobacco sales with healthier alternatives like salads and fresh foods.
"There's not 25 to 40 percent of the people quitting smoking, obviously," said Steve Loehr, vice president of operations for Kwik Trip, a convenience store chain with about 355 stores in Wisconsin, Minnesota and Iowa. "They're finding other places to buy cigarettes."
Stores along Wisconsin's borders are even more vulnerable to a loss in sales, officials with the groups representing roughly 3,000 stores said. The price difference on a carton of cigarettes in Iowa or Minnesota can be as much as $10 or $15, Loehr said.
The only smokers left are the die-hards who will continue buying no matter how high the taxes, said Julie Yahnke, owner of a Quik Stop in Holmen which is near the Minnesota border. She said she only sells about a carton a day; most buyers in her shop get a pack or two at a time.
Grocery stores are swimming upstream in the competition over cheaper cigarettes across state lines, tribal smoke shops and over the Internet, said Brandon Scholz, president of the Wisconsin Grocers Association. His group represents about 1,000 grocery and convenience stores in the state.
Those who pushed for the higher taxes say it's all about saving lives.
Cigarette smoking results in an estimated 443,000 premature deaths each year, and costs the national economy $193 billion in health care expenses and lost time from work, according to the Centers for Disease Control and Prevention. Smoking is a major contributor to heart disease, cancer and lung disease.
The American Cancer Society estimates Wisconsin's new tax increase will stop 33,000 kids from starting to smoke and motivate 17,000 adults to quit.
After the $1 increase in January 2008, calls to the state's Tobacco Quit Line more than tripled.
Busalacchi said her anti-smoking group was trying to publicize resources that are available to help smokers quit.
"If you're a tobacco user, take advantage of it. Use it as an impetus to quit," she said of the tax increase. "Get a jump on New Year's. You're going to improve your health dramatically."
And while health advocates hope the higher tax motivates more people to quit lighting up, Gov. Jim Doyle and the Democratic Legislature are counting on the extra $335 million over the next two years to help with the state's bottom line.
For the current two-year budget, cigarette and tobacco product taxes are nearly 6 percent of all taxes collected at $1.5 billion. That is fourth highest behind income, sales and corporate taxes.
All money raised from cigarette and tobacco taxes goes into the state's general fund, which is then tapped to pay the majority of expenses related to running state government.