Tobacco Price Could Rise in Massachusetts
BOSTON -- Massachusetts smokers may face price increases of a much as $1 per pack, beginning this fall if the state Department of Revenue takes action.
Last week, the Department sent letters to more than 6,000 Bay State retailers informing them that after Oct. 1, they no longer will be able to use "buydowns" to reduce their retail prices below the current minimum prices of $5.41 to $5.49 a pack. This could raise consumer prices from 60 cents to $1 per pack, according to reports.
The Revenue Department tried to stop buydowns last summer, but dropped the issue in November due to fierce opposition from retailers. However, Commissioner Alan LeBovidge decided to take action again.
Since a state per-pack excise tax went up 75 cents to $1.51 in July 2002, sales of cigarette tax stamps, required on every pack sold in Massachusetts, have dropped nearly 15 percent, according to records. And retailers say more smokers are buying from vendors in border states and on the Internet.
Additionally, convenience store operators have said a third of their sales come from cigarettes, with cigarette buyers accounting for a large portion of other purchases as well.
Altria Group Inc., whose Philip Morris USA subsidiary owns the nation's best-selling Marlboro brand, said it revamped its discount structure over the past year to move away from buydowns. Philip Morris now offers the bulk of its discounts to cigarette wholesalers, which in turn are expected to pass them along to their retail customers. The current size of those discounts, which are permissible under Massachusetts minimum pricing regulations, amount to 65 cents per pack.
Last week, the Department sent letters to more than 6,000 Bay State retailers informing them that after Oct. 1, they no longer will be able to use "buydowns" to reduce their retail prices below the current minimum prices of $5.41 to $5.49 a pack. This could raise consumer prices from 60 cents to $1 per pack, according to reports.
The Revenue Department tried to stop buydowns last summer, but dropped the issue in November due to fierce opposition from retailers. However, Commissioner Alan LeBovidge decided to take action again.
Since a state per-pack excise tax went up 75 cents to $1.51 in July 2002, sales of cigarette tax stamps, required on every pack sold in Massachusetts, have dropped nearly 15 percent, according to records. And retailers say more smokers are buying from vendors in border states and on the Internet.
Additionally, convenience store operators have said a third of their sales come from cigarettes, with cigarette buyers accounting for a large portion of other purchases as well.
Altria Group Inc., whose Philip Morris USA subsidiary owns the nation's best-selling Marlboro brand, said it revamped its discount structure over the past year to move away from buydowns. Philip Morris now offers the bulk of its discounts to cigarette wholesalers, which in turn are expected to pass them along to their retail customers. The current size of those discounts, which are permissible under Massachusetts minimum pricing regulations, amount to 65 cents per pack.