April Fool’s day – Tax hike

It would be a joke if it were not so serious – Federal tax increases become official April 1 and the runup has already caused major fall-out.

Many retailers and wholesalers have cleaned out stocks to avoid the floor tax and one manufacturer I spoke to had not sold a cigarette in a week.

Cigarette prices have already increased in advance of the tax hikes. Both PM USA and RJR raised prices –  slightly more for their discount brands than premium!

Consumption is predicted to drop at least 7%. The Federal Government expects to net $33 billion to fund Schip. In the short-term this income stream is secure but the longer term outlook is not so rosy.

There are many pending State tax increases yet to come! 

How will consumers avoid cigarette taxes?


#1 RockytheRealist on 04.03.09 at 12:57 PM

And our buddies at PM sent a letter out last Friday letting all their “Trade Partners” (is that an oxymoron?)know that there will be no leeway in their Order Execution or Guarantee In Stock programs! I paraphrase here “our consumers expect to find their products on the shelf and we expect it to be there”. In the meantime allocations exist while wholesale and retail look to replenish!

#2 FEDUP on 04.04.09 at 6:23 PM

You know I get so tired of all the crap that Philip Morris feeds us at retail. They are so full of it and it amazes me that so many retailers just don’t see the crap. I mean they just sit and let all the legislators off that voted for the Marlboro Protection Act! I mean don’t you folks get tired of it. I do I hate PM with a passion! It irritates the hell out of me when my NAM spins the “spin”. Hey Rocky follow the orders like a good little retailer! Give me a break. Our customers are not interested in the PM spin!

#3 TAZ on 04.06.09 at 12:47 AM

FET Increase Takes Effect
An opinion piece in the Wall Street Journal by Brad Schiller, an economics professor at the University of Nevada, Reno, said that in spite of President Barack Obama’s statements during his campaign that “no family making less than $250,000 a year will see any form of tax increase,” the April 1st Federal excise tax (FET) increase on tobacco products affects mostly individuals and families with much lower earnings because over half of all smokers in the US are low income and one of four are officially classified as poor. (Wall Street Journal – WSJ 04/01)

#4 john rolfe on 04.10.09 at 5:41 PM

With the advance price increases, we are estimating that the manufacturers will have raked it in during the first quarter and that those distributors able to get product beyond their allocations will have scored sizable gains. But the poor consumers will now be faced with having to buy more over the Internet and through the Native Americans.

#5 jancascade on 04.21.09 at 4:23 PM

Why do retailers continue to sell PM products? They sell their retailers and customers out time and time again.

I threw them out years ago and I am still in business.

#6 jancascade on 04.23.09 at 4:53 PM


Another example of the evil PM. They have been trying for years to increase the cost of RJR’s snuff and have found an avenue via the Oregon legislature.

#7 TAZ on 04.23.09 at 11:36 PM

Actually this was a Goal of USST. But PM will definitely support this especially since Grizzly is the number 1 Brand now!

#8 jancascade on 04.23.09 at 11:48 PM

PM bought USST. Their lobbyist are just better than the old USST lobbyist. If PM wants it PM gets it, they play lawmakers like fiddles.

#9 Desert Dude on 04.24.09 at 7:53 PM

Hey Jancascade you see the new Gambler Tube Cut Premium Cigarette Tobacco! What a beautiful product! Great job from the guys at Republic!!!!!

#10 Bill Godshall on 04.29.09 at 1:39 PM

Weight based taxation for smokeless tobacco products is more beneficial for public health and fairer for competitors (than ad valorem price based taxation).

More states are likely to switch from price based to weight based taxation for smokeless because PM lobbyist have joined with UST lobbyists in advocating the change and because its a more rationale taxation method.

If sales continue increasing for Camel Snuff, Snus, Orbs, Strips and Sticks (and if those products aren’t banned by Congress, as the Waxman bill would do), RAI also is likely to start supporting weight based taxation of smokeless.

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