Montana Retailer Blasts Tobacco Tax

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Montana Retailer Blasts Tobacco Tax

BILLINGS, Mont. -- Shayne Meskimen says he's a little burned up with the way a new 52-cents-a-pack tax on cigarettes went into effect last Thursday. House Bill 407, which raised taxes on cigarettes and other tobacco products, was passed on the final day of the Legislature.

Meskimen, owner of Lockwood convenience store in Billings, Mont., said a Department of Revenue letter notifying him of the tobacco tax increase arrived in the mail Wednesday. That gave him less than 12 hours to change the prices on thousands of cartons and single packs of cigarettes, not to mention cigars and packages of smokeless tobacco that were also affected.

Even with a computerized inventory system, raising the price for tobacco products isn't a matter of pushing a button on your computer, Meskimen said. "You have to punch in every one of those numbers because every product has its own bar code," he told The Billings (Mont.) Gazette. "There was no time allocated to give merchants time to prepare for the higher tax. If they had said the new tax would have gone into effect June 1, that would have given us time to prepare for it."

Because of the late notice from the state Department of Revenue, Meskimen said, he didn't get the prices changed by the time the new tax kicked in Thursday. As a result, he lost about $6 for every carton of cigarettes that he sold on Thursday because he'll have to pay the higher taxes for all cigarettes sold that day.

"It put a real bind on us at the retail level. We've got a ton of other work to do," Meskimen said.

Meskimen believes the new tobacco tax is prejudicial because it targets a few Montanans. He also worries that higher taxes will encourage smuggling, in which people drive to Indian reservations or to states that have lower taxes and bring back tobacco.

"That's happening in other states that have raised their cigarette taxes," Meskimen said.

The state Department of Revenue is requiring all 2,500 retail merchants of tobacco products to conduct an inventory of their tobacco stocks. Merchants must pay additional tax on the tobacco products they had in inventory before the new tax went into effect May 1. Merchants must provide the Department of Revenue with an inventory report and tax payment by June 30.

Other merchants said they weren't overly inconvenienced by the tax increase. "We knew that we would have to do an inventory so we didn't have a problem with it," said Jill Olson, manager of a Tobacco Country store in Billings.