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The Great Cigarette Tax Debacle

By Terry Gray

          It seems odd to me that in a society which preaches diversity and tolerance for minorities we find it in our hearts to totally screw a major minority – smokers. 

          At 3 cents a pack Kentucky excise tax, from June 2003 to June 2004, Kentucky smokers paid $21,551,000 in tobacco tax that only smokers paid.  At 6% Kentucky sales tax, from June 2003 to June 2004, Kentucky smokers paid $130,937,000 in sales tax on tobacco that only smokers paid.  At 39 cents a pack Federal excise tax, for fiscal year 2004, Kentucky smokers paid $7,778,569,117 in federal excise taxes that only smokers paid.  Since November 1998 to June 2004, Kentucky government received $620,117,489 from the Master Tobacco Settlement law suit against tobacco companies.  This sum, paid by tobacco companies was passed on to smokers via higher cigarette prices.

          In June or July of 2004, the state excise tax on cigarettes was raised by 27 cents a pack to 30 cents.  Using the figure of $21,551.000 in excise taxes in fiscal year 2004 at 3 cents a pack, we see that 718,366,666 packs of cigarettes were sold in Kentucky.  Multiplying 718,366,666 times 30 cents a pack we get:  $215,509,999 in projected Kentucky tobacco excise taxes for fiscal year ending 2005, a tax paid only by smokers.

          Louisville state representative Mary Lou Marzian, undoubtedly a Nazi, wants to raise the cigarette tax again.  This time she is bold and greedy.  Smokers can expect to pay 75 cents a pack in excise taxes on cigarettes in 2006.  Let’s do the math.  Packs of cigarettes sold times 75 cents a pack excise tax will bring the great state of Kentucky $538,774,999 in new taxes.

          Mike Kuntz says that smokers cost the state about $300 million in healthcare expenses.  Mr. Kuntz is using a very bad stat.  He lumps together a whole bunch of things in order to get that figure, and I doubt if the figure is correct.  When a smoker gets sick and goes to the doctor, he is listed in the statistics as a smoking related illness.  This label is there whether or not he goes for a chest cold, lung cancer, or a stubbed toe.  Mr. Kuntz also fails to address the issue of who is insured and who isn’t.  Most smokers, just like the rest of the working stiffs in this state, have some form of insurance which pays for their illness or injury.  The money for treatment does not come from the state medical welfare coffers.

          There is an alternative to paying 75 cents a pack on cigarettes.  Blackhawk Tobacco is an online store, but you can’t buy your cigarettes online.  Let me explain.  Illinois began sending tax bills to those in Illinois who purchased their cigarettes online so that they avoided the ridiculous and punitive Illinois excise tax on cigarettes.  Illinois has threatened all kinds of punishments for those who refuse to pay the tax.  These threats have scared a lot of people into parting with their money.

          UPS and Fedex were only too happy to turn over the names of those to whom cigarettes were shipped, before they enacted policies not to ship tobacco through the mail. 

          Then along comes Blackhawk.  You can go to their site and send in a purchase order and then they send you an email with their phone number.  You call them and give them your credit card number.  Therefore you haven’t purchased cigarettes online, you have simply shopped online and purchased over the phone.

          But what about shipping for my tax-free smokes?  The good old U.S. Postal Service ships, no questions asked.  Right now, a carton of cigarettes purchased in stores is hit with a $3.00 excise tax.  If the new tax goes through, the new tax will be $7.50 a carton.  This raises the price of a carton of cigarettes from about $26.00 to about $30.00.  Smokers can purchase cigarettes at Blackhawk for $14.00 a carton and $8.00 shipping, a savings of $8.00 a carton after the new tax.  The $8.00 shipping cost is for up to 9 cartons.  So 9 cartons from Blackhawk cost $134.00 as opposed to $270.00.  Shipping is free with 10 cartons.  Ten cartons in the store will cost $300.00.  At Blackhawk they are $140.00.

          You decide if you want to pay for dental care for indigent kids or use the savings for yourself.

(Editor’s note:  We have no idea whether this arrangement proposed by Terry Gray is legal.)

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