Businesses chew on cigarette tax hikes

The war on smoking is hitting home in North Carolina.

With Gov. Mike Easley aiming to raise the cigarette tax 45 cents during the next two years, and some N.C. legislators rallying to hike it even higher, local businesses and smokers are caught in a political maelstrom that shows no signs of subsiding.

The governor's budget for 2005-07 proposed a tax increase that, when added to the current 5 cent tax -- the second lowest in the country -- will bring taxes on cigarettes to 50 cents by 2007.

And a bill co-sponsored by Sen. Ellie Kinnaird, D-Orange, could increase the tax on a pack of cigarettes to 80 cents.

"There is more support than ever," Kinnaird said. "I think just about everybody really feels we are ready."

But the local businesses and smokers affected by this bill aren't as prepared as the legislators for the tax hike.

Walter McFall, general manager of TJ's Campus Beverage & Tobacco on Franklin Street, said businesses might falter or fail because of the tax.

"It will detrimentally harm business," he said. "There is no question about that."

Although the overall decrease in income might not be that high, McFall said that even a small margin could damage a business.

"Even if we have a ... 10 percent reduction, that could be the difference between staying in business and going out of business," McFall said.

But some local businesses don't see the tax as a problem.

Doc Harvey, general manager of Dominic's NC Sports Bar & Grill, said he has had experience with cigarette tax increases before and was not fazed by their impact.

"I lived in California when they raised the tax out there," he said. "And I didn't notice any appreciable drop in the number of smokers we had coming in there."

He said his bar, as well as most others, already charges more than most gas stations for cigarettes, and he only expects a small price increase, if any.

"I can't imagine we would ever charge $6 for a (pack) of cigarettes," he said. "That is obscene."

Kinnaird said her legislation is more about preventing the advent of new, young smokers and stopping collateral smoking damage than about any possible economic effects.

"We have to weigh the good and bad of any policy," she said. "Think about the children who are suffering from secondary smoke."

Kinnaird also pointed out the huge amount of money that might be saved if this tax reduces smoking.

"One of the leading causes of Medicaid costs is tobacco-related illnesses," she said.

Even with the added hit to their wallets, many smokers say they won't be deterred from their vice of choice.

Cory Patton, 23, said the tax won't really affect his habits.

"It doesn't really bother me one way or another," he said. "If you're addicted, you're gonna buy them no matter what."

Because of smoking's addictive nature, some see the tax as an unnecessary burden on an unfairly targeted portion of the community.

"There are people out there who do smoke, and I think there is a war going on against them," McFall said.

He said another concern is where the money from the tax will go.

"I just haven't got a straight answer from anybody proposing this, what it's going to be used for," he said.

Regardless of where the money goes or whom the tax affects, there can be no doubt that smokers are destined for extinction, said sophomore English major and smoker Jed Templin.

"Smokers ... we are a dying breed."

Contact the State & National Editor at stntdesk@unc.edu.