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Ohio's Proposed Tax Increase Could Cost 1,900 Jobs

COLUMBUS, Ohio -- The Ohio Council for Reasonable Business Policy, including retailers and wholesalers from across the state, says the state Senate's proposed cigarette tax increase of 70 cents per pack would cost the convenience store industry hundreds of jobs.

“Bottom line, this is going to cost 1,900 jobs -- real jobs like the guy who sells you your newspaper, coffee and doughnut at the convenience store every morning,” said Nate Willison, executive director, Ohio Association of Convenience Stores. "Small businesses in towns all across the state are in jeopardy.”

The American Economics Group estimates tobacco sales directly support 12,500 retailer and wholesaler jobs across the state. More than 55 percent of Ohio's tobacco sales take place in convenience stores. If the excise tax is increased by 70 cents per pack, retailers will lose approximately $805 million in retail sales (230 million packs at a price of $3.50 per pack) and approximately $233 million in sundry product sales, or products normally bought in conjunction with tobacco products, the council said in a statement.

"There are very real consequences to raising the excise tax even higher than it already is," said Beth Wymer, executive director, Ohio Wholesale Marketers Association. "It was bad enough that the governor wanted to raise it by 45 cents per pack, but raising it to $1.25 per pack will mean that our tax is higher than all of the states around us except Michigan and only $1 per carton less than Pennsylvania, which eliminates our competitive advantage."

If the increased tax is approved, an individual could drive a car across the border into Indiana, buy a trunk load of cigarettes (approximately 1,000 packs), and sell them to friends and family in Ohio for a profit of $700, the group claimed. The profit is even greater when buying the cigarettes in Kentucky, which increased its per-pack tax by 30 cents on June 1 -- the same trunk full of cigarettes would generate nearly $1,000 in profit.

"Organized crime, smash-and-grab robberies, even counterfeit cigarettes have been increasing in Ohio since we raised the cigarette tax previously," Willison said. "This is only going to get worse if we increase the cigarette tax even more. That means lost sales, lost tax revenue and lost jobs for Ohioans."

Approximately 22 percent of adult Ohioans smoke. According to the Department of Taxation and economist William Orzechowski with Orzechowski and Walker, in fiscal year 2004 smokers paid $540 million in state excise taxes, $207 million in sales taxes on cigarettes, $4.3 million in local cigarette excise taxes and $312 million in Master Settlement Agreement payments for a grand total of $1.06 billion. This was the third-largest funding source for the state and more than the $864 million generated by Ohio corporate franchise taxes.

The Ohio Council for Reasonable Business Policy is a coalition of manufacturers and trade associations who represent retailers, wholesalers, vending machine operators, entertainment and hospitality venues and others who share common interests with regard to tobacco-related issues and tobacco consumers.
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