Higher prices would discourage young smokers from trying inexpensive tobacco products.

09:36 AM EDT on Tuesday, June 7, 2005

BY SCOTT MAYEROWITZ
Journal State House Bureau

PROVIDENCE -- In the past few years, lawmakers have pushed Rhode Island's cigarette tax higher and higher, making it the highest in the nation.

Now, a number of health advocates are pushing the state to raise its tax on other forms of tobacco including cigars, pipe tobacco and chewing tobacco, saying that children are turning to these products instead of cigarettes.

Margaret Kane, executive director of the American Lung Association of Rhode Island, said that since the latest jump in the cigarette tax last year cigarette sales have declined dramatically while sales of these other products have increased.

Kane says the shift -- in large part -- is due to children and younger smokers now purchasing products such as little cigars instead. However, Kane said there is no data to back up these assumptions.

"Kids are the most price-sensitive when it comes to tobacco products," Kane said.

Campaign for Tobacco-Free Kids, the American Heart Association, Cancer Society and Lung Association began running ads in local newspapers yesterday calling for a higher tax.

The ad -- "Same deadly toxins. Different Tax." -- features a pack of 20 Marlboro cigarettes which it says sell for $5.63 next to a pack of 20 Swisher Sweets little cigars which it says sell for $2.09.

"Rhode Island's high cigarette tax is working to cut smoking especially among kids," says the ad which ran in The Providence Journal, Newport Daily News and Pawtucket Times. "But sales of other tobacco products such as chewing tobacco and little cigars have increased dramatically yet are taxed nearly four times less than cigarettes. All tobacco products are addictive and deadly."

Rodney Allen, owner The Smoking Jacket, in Barrington, said that an increase in the tax would be disastrous.

His store, which sells premium cigars and pipe tobacco, is just a "hop, skip and jump" to Massachusetts and Allen says he would lose customers.

"We're sampling shops," Allen said, with people already making the bulk of their purchases across state lines or on the Internet. With a higher tax, he said, "you might as well put a for-lease sign on my door."

Allen said his store -- and most other premium cigar shops -- don't sell Swisher Sweets or similar machine-made domestic cigars.

His average cigars start at $6 a cigar.

"Cigars are not inexpensive. They are a luxury item. They are something people relax with," Allen said. "The cigar smoker is an older, mature, family person."

Last year, the General Assembly adopted Governor Carcieri's request for a 75-cent hike in the cigarette tax, to $2.46 per pack -- the highest of any state. Less than a decade ago, the state tax was 61 cents.

From July 1 -- when the new tax took effect -- through the end of May, 48.7 million cigarette packs have been sold in the state. That is down 20.6 percent from the 61.3 million packs sold here during the same period the previous year, according to the state Division of Taxation.

Some of that can be attributed to the new statewide smoking ban which took effect March 1, but the advocates also say the tax played a large role.

The sales of other tobacco products is harder to determine. Chewing tobacco, pipe tobacco and cigars are taxed on their wholesale price, not by the unit.

During that same period, the tax on other tobacco products did rise from $1.6 million to $1.8 million, according to the Division of Taxation.

The tax rate has not been raised in four years, when lawmakers increased it from 20 percent of the wholesale price to the current 30 percent.

Kevin O'Flaherty, director of government relations and advocacy for the American Cancer Society here, said that if the cigarette tax were converted to something similar to the tax on other products, it would be about 116 percent of the wholesale price.

O'Flaherty said the advocates are hoping to persuade the House Finance Committee to raise the tax somewhere between 70 percent and 90 percent of wholesale price.

Rep. Amy G. Rice, D-Portsmouth, introduced a bill which would raise the tax to 50 percent. The tax currently brings the state $2.1 million a year. Her bill would generate about $1.4 million extra, if sales were to stay steady, something Allen doubts.

Massachusetts taxes smokeless tobacco products -- such as chewing tobacco -- at 90 percent of wholesale price and cigars at 30 percent. Connecticut's tax on tobacco products other than cigarettes is 20 percent.