Rapid City Journal: South Dakotans going over the line to dodge the taxman
The Rapid City Journal is reporting tonight that South Dakotans out in the Hills are going over the state line to dodge the increase in Tobacco Taxes:
It's part of an interesting debate on the issue - will those that can avail themselves of another state's lower level of taxes continue to do so on a long term basis? Or is it a bunch of short term hype?
Two weeks after the state’s new $1-per-pack tax increase on cigarettes took effect, vehicles with South Dakota license plates — Lawrence County mostly, but also Pennington and Butte — came and went from the Stateline Station often enough to keep manager Kathy Drentlaw hustling throughout the morning and into early afternoon.Read it all here.
“They’ll start in the morning and come as late as 9:30 at night. It’s an all-day event,” Drentlaw said.
It’s also a money maker for the Stateline convenience store. Drentlaw has had to increase her normal cigarette orders to keep pace with increased demand. She typically ordered about 100 10-pack cartons a week for the store but had been increasing that level leading up to the Jan. 1 effective date of the new law. And last week, she ordered 900 cartons.
“I know I sold at least 700 or 800 (cartons) last week,” she said. “I had to do two emergency orders because I was totally out of Marlboros and Camels, and some different odd cigarettes.”
Kristie Gibbens drove from Deadwood on Monday to buy three cartons of cigarettes rather than pay the higher tax at home. She expects to make the trip about once a week to buy smokes for herself and her husband.
It's part of an interesting debate on the issue - will those that can avail themselves of another state's lower level of taxes continue to do so on a long term basis? Or is it a bunch of short term hype?
Comments
It is a shame that this tax passed. Another shame is that the monies then are not going to prevent smoking it is being split. Most of the cost of cigs is tax anyway.
So now you know I was am and am opposed to this higher taxation!!
All of you who want to use taxes to do social engineering, the demand for cigarettes is inelastic. If you do not know what elasticity means, you have a very uninformed opinion on cigarette and tobacco taxation.
And to "economics," the demand for cigarattes is not completely inelastic. There will be someone, somewhere, who quits smoking because of the increased cost. The state will not lose tax revenue, and we will be making smoking more expensive and inconvenient. And that means, in the long run, that fewer people will do it.
Wny people want to waste their hard-earned dollars on smokes is beyond me anyway. There are new methods out there to help people quit, and they surely can't be as expensive as buying those packs of cigarettes. Chantix is one stop smoking aid that is popular with docs. If you don't like paying the high tax, check it out. It sure beats driving a long ways just to get that package of smokes, having tobacco breath, and most certainly ending up with some disease (pulmonary, cardiac, or cancer) that will kill you or seriously impair your life.
Wouldn't it be wonderful if the naysayers were right - that just about everyone quit smoking and then we wouldn't have the tax revenues to play with?!
Now I hear people saying people will quit or will only drive to lower prices for a few weeks.
The state better not spend the anticipated new tax money yet. I have an estimate of my own and that is the tax will fall short of the $40MM plus that is projected. Any takers on that bet?
Another factor. Tribes are not adding the $1 a pack tax so you can still buy cigs in SD for the lower price at over 50 locations on the reservations around the state. Just ask MN and ND what happended with leakage of cig sales to the reservations in their states.
Initiated measures are rarely well thought out and this is another case and point.
People will go to where they don't have to pay the tax if it is at all financially beneficial to do so. Reservations and cities near the borders will see lots of cigarette sales. The tax may get some people to quit. Both of these lower the revenue over all coming in. It remains to be seen if there is a net gain over time or not as people quit or make a habit of buying outside the normal sales tax applicable venues.
What still bothers me is how much of this additional revenue is not going to anti-smoking measures. The state offers some stop smoking help but it is not well known, they don't advertise it. The program also only offers only certain free materials. You could get zyban or the patch but not other stop smoking aids. The person I spoke with at the state program said they DID NOT HAVE THE MONEY to offer more stop smoking aids to the public at a discount. Many people can't use the patch due to a reaction and some people can't use zyban because of medicine conflicts. I also know at least one person who had a horrible reaction to zyban and it left them with a permanent minor memory and speech problem. The extra dollar should be going to stop smoking FIRST and when that is fully funded then the legislature can get their grubby little mitts on the rest.
to p--s in. I don't see anything wrong with taxing something like cigarettes that's not a necessity.
So if this was stupid legislation I would assume you think wasting $58 million every year on tobacco related Medicaid in SD is wise? Or that spending a collective $250 million every year in SD in increased insurance, medicaid, PTO, etc is also wise?
You don't see the advertisements for the SD Quitline? You have got to be kidding me. They are on all the time and that's with their pre-tax budget. The Dept. of Health's plan for the extra $5million they are receiving will be a great resource to helping people quit.
But I guess we should have listened to you and watch our Medicaid and insurance rates steadly increase year after year instead of trying to do something about it.
9:42 if you are such a goody goody and know what is so good for us why aren't the funds earmarked for health education and paying for medicaid!
What I don't like about taxing a certain "sin" is WHAT'S Next? I hear taxing fast food?
Anyone with an eye and an a------ knew people were going to get things at the cheapest cost. Next will be internet orders or Indian Reservations.
The net result will be NO INCREASE in revenue.
He claims you can buy just about anything and you don't have to pay any state tax. He says it's costing our State government millions in sales tax dollars lost!
He doesn’t smoke so he doesn’t know for sure, but he doesn’t think you can buy cigarettes off of the internet. Is that right?
A wild claim of his that I don’t think is true: that you can buy something in Rapid (off of their internet site) and have it delivered to your site outside of the city limits and not have to pay city sales tax. Now he has never done that but he claims it can be done. I think he is totally wrong. Just simply can’t be done.
Any of you know much about taxes and internet sales?
He gave an example of someone going to the MegaMall in the Cities and shopping to avoid paying the sales tax. He said if that person didn't report their purchases to the state so they could collect sales tax they could be fined. I'm no expert, that's just what I remember him saying to the audience.
My experience is that companies that sell online and also have stores where people can buy merchandise (e.g. Penneys, Best Buy, Staples) have to charge sales tax. Companies like amazon.com and drugstore.com that do not have physical stores do not charge sales tax.
Some small businesses, such as gift shops, also sell on eBay. They only charge sales tax to people who reside in their state. I don't know why or what the laws are; this is only based on my observations.
I would be surprised if cigarettes could be legally purchased online since there are age limits for smokers. I suppose there are people out there trying to do that though, just like the ones who sold Viagara to kids.
I will add that I also purchase medicine online from Canada. I prefer to give our local pharmacist as much business as possible, but this particular medicine is not covered by our health insurance. I can save 34 percent by buying it in Canada, which for me is about $80 a month.
My doctor gives me the prescription, which I scan and e-mail to the company. I think they check with the doctor to make sure everything is on the up and up because I had to supply all sorts of contact information to them.
Most studies suggest an elasticity of between -.20 and -.30 for caucasians smokers.
This will help a few people quit (probably more so in the short run than long run), but it will not have the lofty effects most of the proponents think.
2 of the 3 smokers that work with me have quit smoking because of the tax going up. Again, that wouldn't make for much of a news story.
The state should not be spending money that will not materialize.
If border stores are experiencing a 800% - 1000% increase in sales SD is missing out on lot of tax revenue that voters were told to expect if the increase passed.
Rounds and a few others don't need that tax to materialize. He only needs to be able to present a balanced budget using those numbers based on projections of current smokers.
That way he can validate his increased spending while taking less from the the reserve fund and balancing the budget and saving the world all in one day.
Besides if you anti smoking folks are so against it why not a 50 dollar tax on cigs? That would virtually eliminate smoking. It would also slowly but surely eliminate all of the attending medical costs associated with it.
The tobacco tax was a giveaway to education and other industries while using sin as political cover.
I want to see the tobacco tax back next election cycle asking for several more dollars until smoking is all but a myth. Won't happen though because this is not about making people healthy its about taxing and spending those who are willing to pay for it.
Maybe it's time to implement a voluntary income tax. All those who are for it simply send in your SD 1040 to Pierre with a percentage of your income on it.
I wonder if Jack Billion or Heideprim would do it?
*I have not yet spoken to a smoker who plans on quitting (about 15 so far). One has even joined a "buying group" of about 10-12 smokers. They plan to rotate going to Larchwood, IA the second Saturday morning of every month to purchase for all in the group.
*Among the convenience stores I patronize, they all are reporting initial decreases in sales ranging from 10-40%. I will concede that it is early in the process, but many have said that their regular customers have indicated that they have already secured other sources of obtaining smokes. In addition, they are also reporting OVERALL REVENUE LOSS. When gas is $2.21 in Sioux Falls and $2.13 in Larchwood, well, you get the picture.
*Don't forget that in addition to the many Indian casinos that provide tax-free smokes, there are also at least 2 military exchanges in the state that provide the same thing.
*Finally, someone needs to explain to me how you can tax a product in order to try to cut down on consumption of that product and then earmark and project revenue. Isn't it kinda like your wife putting out a $1 "swear jar" and then expecting you to take her out for supper on Saturday night with the proceeds?????
Okay, I'm done.
75% of cigarette purchases are point of purchase sales meaning one pack at a time. You can't tell me that all these high school and college kids are going to start creating pools to drive somewhere to buy cartons.
Let's come back to this topic in 6 months and we'll see how it's working. This legislation wasn't meant to get the die-hard smokers to quit, it was meant to keep the young kids from ever starting to smoke and the high school/college/ready to quit/casual smoker to rethink their poor decision.
Sioux Falls stores have been reporting a sharp decline in sales of cigarettes and other tobacco products. Border states sales have increased ten fold.
I'm sure buying one pack at the time works when there is a not large price disparity between SD and neighboring states. The tobacco tax increase is giving people an incentive to cross the border in large numbers and proving your statistic wrong anon 9:17.
Before you say my statistics are wrong try calling the Dept of Revenue. They know along with the Governor that the first 3 months of a new tax causes people to alter their behavior. Come April or May let's see how many people are still driving.
The fact of the matter is most people by cigarettes conveniently at a gas station or grocery store. Yes, no one is arguing that there will be a few stubborn people with the means to do so that will drive 30-60 miles to save $40.
Also, to repeat, this legislation was meant to keep young children from starting by making it more expensive and increase the money spent on tobacco control from $750,000 to $5 million along with getting the high schoolers/college/casual smokers to quit.
http://indiansmokesonline.com/printform.html
http://www.cigarettesexpress.com/index.htm
Most of the smokers I know that swore they would quit have already started smoking again or they're bumming from me. I roll my own, so the $1 per pack doesn't affect me.
Since making marijuana illegal has kept teenagers and young people from using it, I'm sure this tax on tobacco will work just as well.
if second hand smoke bothers you, stay away from smokers!