By SCOTT NILES Courier staff writer
April 10, 2008 10:42 pm
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BLOOOMFIELD — It’s been a year since the Iowa Legislature increased the state cigarette tax by $1 per pack and some area retailers are still feeling the impact to their wallets.
Bloomfield Gas-N-Mor Owner Jeff Owen said he has seen roughly a 40 percent loss in cigarette sales since last March when the increased tax went into effect.
Owen feels the impact more sharply considering Bloomfield is about 10 minutes driving time from the Missouri boarder.
“I’ve talked to the truck drivers who deliver to here and the Icehouse and they have told me they deliver about 2,200 cartons of cigarettes a week there,” Owen said. “I get around 60 cartons each week. That’s a big difference.”
The Icehouse convenience store/gas station is located on the south side of the Iowa-Missouri border along Highway 63. While the Icehouse owner declined to comment, a quick glance at the convenience store’s parking lot shows a number of vehicles with Iowa license plates.
Farther north, Mark Ebelsheiser, owner of the Quick Shop convenience store in Ottumwa, said cigarette sales did drop off after the increased state tax went into effect.
But now ...
“I’d say we are back around 95 if not 100 percent now, especially with cartons,” he added.
Ebelsheiser said the state makes roughly $16 off each carton of cigarettes he sells, where the retailer (selling at state minimum to be competitive) makes around $1.50 per carton profit.
Owen said it costs the retailer more to keep the cigarettes in stock.
“We have to pay the $1 tax increase, too, per pack and for the cartons,” he said. “It just gets passed down from us to the customers. I don’t blame them for wanting to get something cheaper.”
And Drakesville resident Toni Helm takes advantage of Missouri’s “cheap” cigarettes.
Helm’s brother-in-law “goes to Missouri once a week and I give him money to buy me cigarettes,” she said. “It saves me about $20 each week.”
She said a carton of the cigarettes she purchases costs roughly $33 a carton in Iowa (at the lower end); in Missouri, that same carton costs $20.
Why such a disparity in cost?
In Iowa, the sales tax on cigarettes is $1.36 per pack — that’s 18th in the nation.
Missouri, meanwhile, taxes cigarettes at 17 cents per pack — 50th in the nation, including Washington, D.C. New Jersey ranks first in the nation with a $2.57 per pack tax, while South Carolina has the cheapest smokes in the country with a 7-cent per pack tax.
According to a recent report from the Iowa Department of Revenue, the number of cigarettes sold has decreased by 36 percent in the last year.
The IDR estimates that nearly 3.2 billion in cigarettes were sold from last March 2007 to March 2008, down from the 5 billion cigarettes sold between March 2006 to March 2007.
Meanwhile, Missouri cigarette revenues have slightly increased.
From July 2006 through February 2007, the state made nearly $63.9 million on cigarette sales. Then from July 2007 through February 2008, they made $65.1 million.
A Missouri Department of Revenue spokesman told the Courier that it’s hard to determine how much of the increase is due to Iowans crossing into Missouri to purchase cigarettes. The agency does not measure sales via county or region, just statewide.
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