Looming MN Cigarette Tax Hike Spurs Buying Frenzy

MINNEAPOLIS (WCCO) — A big jump in the state’s cigarette tax is still more than two weeks away, but it’s already having a huge impact on smokers. They’re stocking up and changing their habits.

During the noontime rush inside Super Smokedale Tobacco in Oakdale, folks like Bill Gardner are hoarding cartons upon cartons of cigarettes – buying a dozen or more cartons at a time.

But stocking up on a product priced at over $52 per carton isn’t cheap. On just this one visit, Bill will fork over $683.60 to the store cashier.

Gardner and other customers are buying enough cigarettes to last them months.

The simple explanation is starting July 1, the Minnesota cigarette tax will jump by $1.60 per pack.

“Oh, I have no problem with the tax. But the price is going up, so if you can, you buy at the bottom price,” Gardner said.

The increase will make Minnesota cigarettes the highest taxed in the five-state area. Once the tax takes effect, it will make Minnesota cigarettes 31-cents more expensive than in Wisconsin and it will cost $2.39 more per pack than North Dakota.

“In this location I’m expecting a loss of 50 to 65 percent minimum,” Hatem Younis, owner of Smokedale Tobacco, said.

Tobacco store owners like Younis are bracing for the loss of business. He’s remodeling his stores to stock more smoking alternatives, like roll your own supplies and the fast-growing E-cigarettes.

“We see the feedback from our customers and everybody is switching right now to either E-cigarettes or roll your own,” Younis said.

Sherry Dziubak and her roommate expect to save 75 percent each month by making the switch from conventional cigarettes.

Because those alternatives are taxed at a fraction of what cigarettes are, the projected $434 million in tax revenues over two years may not materialize.

“My roommate, he’s been on the roll your own for about a year and a half now — the last time taxes went up,” Dziubak said.

Added revenue from the cigarette tax could be as much as $434 million over two years, but as smokers switch to alternatives or buy cigarettes out of state, that projection could come up short.

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