Texas Taxes take Toll on Cigarette Sales

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Texas Taxes take Toll on Cigarette Sales

AUSTIN, Texas -- Since the state cigarette tax increased six months ago by $1 per pack, from 0.41 cents to $1.41 per pack, local published reports state cigarette sales are already down 22 percent.

While anti-smoking advocates approve of the results, others are warning it may be too early to tell if the decline is due to smokers' quitting, arguing that stockpiling before the tax increase and cross-border and Internet sales could be giving false results, the Houston Chronicle reported.

During the first half of 2007, the state sold approximately 484,000 tax stamps, compared to the 620,000 stamps sold in the first half of 2006, the report stated.

A survey of member stores in the Texas Petroleum Marketers and Convenience Store Association showed cigarette sales down about 15 percent, said Doug DuBois, of the association.

Convenience stores in Louisiana, where the tax is only 36 cents a pack, have done a brisk business since January, and DuBois said stores in the Rio Grande Valley have seen the biggest declines in sales.

Tax analysts told the paper it's difficult to measure the initial effect of tax hikes on smoking because many smokers stock up in advance of an increase. Sales were up 27 percent in the last quarter of 2006, according to Dale Craymer, chief economist with Texas Taxpayers and Research Association, a business group that tracks state tax policy.

"It's really hard to get a handle on what the hit on consumption is going to be immediately after the tax hike takes effect precisely because folks tend to have stockpiled," Craymer said. "Over a longer period of time, we'll tend to see fewer smokers or smokers smoking less."

The tax also was raised on chewing tobacco, but cigars were spared. The tobacco taxes were part of a legislative package enacted by lawmakers in 2006 to fund property tax relief.