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WASHINGTON -- Federal cigarette excise taxes officially jumped 5 cents yesterday to 39 cents per pack.
President Clinton signed the federal tobacco-tax hike, the fourth in 11 years, into law in 1997, but it didn't go into effect until Jan. 1.
Anti-smoking activists say the tax increase -- which will raise an estimated $1 billion in revenues per year -- isn't steep enough. They are vowing to fight for more tax increases this year.
"This will not be the last tax increase," Campaign for Tobacco Free Kids President Matthew Myers said in a statement. "The federal government is facing a budget crisis for the first time in several years. A federal tax increase used to fund tobacco prevention or other critical programs would be a very wise strategy."
Anti-smoking activists believe a steep tax increase would raise billions of dollars and make it harder for minors to afford cigarettes. But many retailers, who have taken drastic steps over the past two years to keep tobacco products away from minors, said they doubt that an extra nickel of tax will do much to deter smokers, young or old. They note that smokers already are paying up to $30 or more for a carton of cigarettes.
"They used to say people would stop buying cigarettes when they cost $2 a pack; then they said they wouldn't buy them at $3.50 a pack," said Dave Arbra, who sells cigarettes at his Clays Mill convenience store in Lexington, Ky. "I don't think price dissuades anybody. People are going to do what they're going to do."
Bob Zaccarelli, who sells cigarettes at his Southland News store in Lexington, also predicted that smokers wouldn't hesitate to shell out the extra nickel. "People are going to smoke no matter what the taxes are. But it's going to be harder on their pocketbook," he said.
Mark Smith, a spokesman for Louisville, Ky.-based Brown and Williamson Tobacco Corp., said smokers "already pay more than their fair share in taxes."
Besides paying state and local taxes, smokers are also footing the bill for Big Tobacco's $205 billion settlement with 46 states. "When you put it all together, it means there's a real unfair tax burden being shouldered by consumers who choose to smoke," Smith said.
Furthermore, additional tax increases would make cigarettes "outrageously expensive" and drive people to buy tobacco products on Indian reservations or via the Internet to escape taxation, Smith added.