MINNEAPOLIS (WCCO) — It’s been a month since the state’s cigarette sales tax increased by more than a dollar and-a-half a pack. That’s brought the total tax on cigarettes to more than $2.80 per pack.
As a result, the cost for a pack of brand name cigarettes is now in the $7-$8 range, at least. It’s high enough where some businesses are seeing a significant decline in cigarette sales.
Every time Yazan Karaja rings up a carton of cigarettes for a customer, he cringes at the price that comes up on the cash register.
“They went up very much, like $20 a carton almost,” Karaja said.
Karaja’s store, Hastings Tobacco, sells all kinds of tobacco products, but cigarette sales are a big part of his business.
He says customers who are unhappy with his price aren’t afraid to drive to nearby Prescott, Wis., where the sales tax is more than 30 cents cheaper per pack.
“I would say 60 percent of customers, they don’t buy cigarettes anymore,” Karaja said.
Customers like Joyce Hoffman say the silver lining is that the increase has put her down the path to quitting. But she doesn’t see why the state is picking on smokers.
“Why the heck didn’t they tax liquor? That causes more accidents than cigarettes do,” she said.
The new tax could help pay for the new Vikings stadium, but that doesn’t mean much to business owners.
“You can’t smoke at the stadium, but they tax cigarettes,” Karaja said.
But Karaja says it’s too late to ask the state to butt out. The best he can do is hope that business comes back.
“Most of my customers, they don’t like the price at all,” he said. “But it’s not our price that’s how it’s supposed to be. We can do nothing.”
Karaja said about half of his customers buy cigarettes in addition to other tobacco products.
We spoke with other tobacco shops across the state. Some reported a similar decline in sales, while others say there was an initial drop, but cigarette sales have rebounded.
Some owners we talked with said e-cigarette sales have increased. The tax on e-cigarettes is cheaper, but Minnesota is the only state in the nation that taxes e-cigarettes.