Stagnito Media Convenienece Store News Convenienece Store News Single Store Owner Progressive Grocer The Gourmet Retailer Progressive Grocer Store Brands Retail Leader hispanic
 
May 02, 2012

Smokers Switch to Pipes, Cigars as Cigarette Alternatives

PrintSmokers Switch to Pipes, Cigars as Cigarette Alternatives  

WASHINGTON, D.C. -- New data from the U.S. Government Accountability Office (GAO) shows that smokers are responding to the 2009 increase in federal taxes on cigarettes and roll-your-own (RYO) tobacco by purchasing more pipe tobacco and large cigars, which are taxed at a lower rate, according to a USA Today report.

Monthly sales of pipe tobacco rose from 240,000 pounds in January 2009 to more than 3 million pounds in September 2011, while monthly sales of large cigars rose from 411 million pounds to more than 1 billion pounds. Pipe tobacco has become especially attractive to smokers who visit local stores with RYO cigarette machines, where they can make and purchase cheaper cartons of cigarettes.

Additionally, some manufacturers of small cigars increased the weight of their products so that they qualified as large cigars, therefore receiving the lower tax rate while costing much less than a traditional premium large cigar.

The change in spending patterns cost the federal government $615 million to $1.1 billion in uncollected tax revenue from April 2009 to September 2011, reported the GAO. It did not estimate how much money individual states lost.

"That's real money and a tax avoidance scheme Congress ought to be interested in stopping," said Gregg Haifley, associate director of federal relations at the American Cancer Society's Cancer Action Network. "It's also counterproductive for the public health benefit of tobacco taxes."

The RYO loophole has come under fire in multiple states, several of which are closing it through legislation.

In a response to the GAO's report, the U.S. Treasury Department noted that the losses "are not actual losses of revenues, but rather your estimates of the revenue increases if Congress were to change the law to eliminate the disparities."

Sen. Tom Harkin (D-Iowa) and 15 co-sponsors have introduced federal legislation that would eliminate the disparities, as the GAO recommends, but the bill remains in the Senate Finance Committee, according to the report.








Find Reports & Data

CSNews’ 2013 Realities of the Aisle Consumer Study

When it comes to c-store shopper research, Convenience Store News' Realities of the Aisle is in a class by itself. .

CSNEWS 2013 INDUSTRY FORECAST STUDY

The 2013 Convenience Store News Industry Forecast Study projects a fairly optimistic view of business conditions for convenience store retailers this year despite the nation’s fiscal problems..

CSNEWS' 2012 TECHNOLOGY STUDY

A new crop of next-generation technology, including social media analysis, mobile payments and mobile applications (apps), is getting retailer attention, according to the Convenience Store News’ exclusive 2012 Technology Study..

CSNEWS 2012 FOODSERVICE STUDY

Nearly two-thirds of convenience store operators expect to see their foodservice sales increase this year compared to 2011, according to Convenience Store News’ exclusive 2012 Foodservice Study..

CSNEWS' 2012 INDUSTRY REPORT STUDY

The convenience store industry achieved several new sales peaks last year, but rising operations costs and continued volume declines in fuel and cigarettes made the climb difficult..

CSNEWS' 2012 REALITIES OF THE AISLE CONSUMER STUDY

When it comes to c-store consumer research, CSNews’ 2012 Realities of the Aisle is in a class by itself..



SUBSCRIBE TO E-NEWSLETTER SUBSCRIBE TO E-NEWSLETTER


ADVERTISEMENT
Product Spotlight


Deli Express San Luis Burritos
The new in-house line of San Luis-branded 10-ounce burritos for Deli Express uses authentic and unique recipes to satisfy customers' burrito cravings.
 
Featured Videos

Loading...
Playlist

View more


Related Videos
Events + Webcasts
Participate in
LIVE and ON-DEMAND
presentations of
convenience store industry research
from your desktop.
Stagnito Media
570 Lake Cook Rd, Suite 310
Deerfield IL 60015
Ph: 224-632-8200
Fax: 224-632-8266

Privacy Policy
Print / Electronic Media
Convenience Store News
CSNews Supplier Guide
CSNews for the Single Store Owner
Progressive Grocer
Private Label ⇒ Store Brands
Independent Grocer Network
The Gourmet Retailer
Retail Leader
Marketing Guidebook
Directory of Convenience Stores
Events
Hispanic Retail 360

Custom Media