November 22, 2009 -
TALLAHASSEE, Fla. -- Cigarette sales decreases are hurting small stores in Florida and sending smokers to nearby Georgia to avoid the state's new $1-a-pack cigarette tax, according to James E. Smith, spokesman and lobbyist for the Florida Petroleum Marketers & Convenience Store Association.
Smith told the Web site, TampaBay.com, tobacco products -- mainly cigarettes -- trigger convenience store visits that account for 34 percent of in-store sales of items such as snacks, drinks and bread.
"Any time you reduce sales by big percentages, you eliminate a significant portion of profit that retailers use for things like payroll and rent," Smith said. "If you're a customer and you're not going in for cigarettes, you're not going to go in at all. And a lot of sales at convenience stores are impulse buys. That cuts into the bottom line."
Some North Florida cigarette buyers may simply drive across the state line. Smith said his counterpart in Georgia is boasting of a nearly fivefold increase in overall sales in some stores along the border with Florida.
According to the Web site, cigarettes sales are down 27 percent in Florida during the past four months. However, politicians are crowing that despite the drop in sales, tobacco tax collections in Florida are high and holding steady. That's because state economists factored in the sales decrease when they forecast revenue from the surcharge that went into effect July 1.
The new tax, which helps fund Medicaid, will raise $881 million this year and $907 million the next, the economists forecasted earlier this month when they analyzed cigarette sales data.
So far, the money raised by the new tax far exceeds the estimated amount of revenue lost due to the overall decline in cigarette sales. However, experience in other states has shown that continuing increases in cigarette taxation soon reach the point of diminishing returns, as cigarette usage drops or smokers buy from other states or the black market (the more common scenario).
Florida's state tax now stands at nearly $1.34 per pack -- about 91 cents more than Alabama's tax and about 97 cents more than Georgia's tax, which is among the lowest in the nation, said the report.
In the 14 Florida counties that border the other two states, cigarette sales have decreased an average of 34 percent a month since July, compared to the same four-month period last year, according to statistics released last week from the state's Department of Business and Professional Regulation.
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November 22, 2009 -
TALLAHASSEE, Fla. -- 
