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Cigarettes Going Up

Poor Nebraskans who smoke will be affected the most by upcoming tax increases on cigarettes, income and other goods and services.

"They're more inclined to smoke, a greater percentage of their income goes to taxes anyway, and they're more inclined to either want or to use some of the services that are going to be taxed," said John Jordison, director of the nonpartisan Nebraska Tax Research Council.

The tax hikes were approved by the Legislature last week to help the state overcome a $226 million budget shortfall.

The tax package includes increasing sales taxes 0.5 percentage points for one year beginning Oct. 1, and increasing income taxes by 2.2 percent for a year beginning in 2003.

Also, those things that are subject to the sales tax will be permanently broadened beginning in October to include such things as magazine subscriptions, car washes and towing.

A pack of cigarettes, which currently is taxed 34 cents by the state, will be taxed 64 cents for two years starting Oct. 1.

That means a smoker who goes through a pack a day will pay $110 more a year in cigarette taxes alone. Two packs a day will cost $220 more a year.

Joe Bashore, manager of the Tobacco Hut retail cigarette store in Lincoln, said the tax increase has been the topic of conversation among most of his customers.

"They're ready to go to another state," he said. "A lot of people are looking to quit."

Cigarettes aren't the only things going up. The state's sales tax also is increasing from 5 percent to 5.5 percent. That means a $10 purchase will cost 5 cents more.
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