Tobacco Products Display Comes Under Microscope

Some tobacco-related products are coming under fire by one North Carolina lawmaker, and his proposal would have a direct effect on convenience stores.

Rep. Charles D. Graham (D-Lumberton) contends that, in particular, tobacco and pipe wrapping paper are conducive to drug use. To help combat this, he wants to introduce legislation that would prohibit stores from displaying these items, according to the SCNow.com.

"My concern here is our young children, our adolescents," Graham said. "We need to start reshaping their mindsets and send a message out there to the convenience store owner it's not OK to promote this with young children."

Some convenience store owners the news outlet spoke with were in favor of the ban. Pembroke store operator Harold Dean Allen said approximately 25 to 30 people buy tobacco wrapping paper from him every day; however, he did not think the change would affect his business.

"That will be fine with me," he said. "I don't hardly display it anyway. I have it on the shelf but I don't have it reachable."

Graham explained that it is too late to introduce the legislation this session but he hopes to propose it next May.

Farmers in favour of coal for tobacco curing

After the success of the Hwange Colliery Company pilot scheme, where coal was used in curing the golden leaf, tobacco farmers have proposed that the initiative be rolled out to all parts of the country.

They argue that with the programme initiated by the coal mining giant two years ago, farmers benefited from coal availed by rural district councils at subsidised prices to ensure viability and has assisted in the conservation of indigenous trees in their areas.

In the Beatrice area, prominent tobacco farmer, Mr Edson Makina says the programme is a good initiative but needs to be adopted on a national scale to save the indigenous forests which are under threat from massive deforestation.

He noted that apart from conserving the forests, coal cured tobacco has a good quality compared to the crop cured using firewood.

Hwange Colliery Marketing Manager, Mr Charles Zhou said the mining firm has supplied coal at lower prices to the rural district councils to ensure that the low costs are passed on to the farmers.

With the county grappling with the adverse effects of climate change, alternative sources of energy should be adopted on a larger scale as deforestation has been cited as a major cause of the phenomenon in developing countries.

Experts say it is then critical to educate most small scale farmers of the dangers of destroying forests which are usually harvested during the tobacco curing season.

British America Tobacco's first-quarter sales rise

British American Tobacco PLC (BATS.LN) Thursday posted a rise in first-quarter sales, but the world's second-biggest tobacco group by revenue said volumes continued to soften and warned of challenging trading as smokers struggle with tough global economic conditions.

Consumers in more mature markets are switching to low-cost brands as spending power is hit by tax hikes and other austerity measures to help governments rein in borrowing.

BAT volumes were hit by declines in Spain, Mexico, Australia and Vietnam. Still, Chief Executive Nicandro Durante said the company grew market share in all these markets and noted that the rate of volume decline overall is slowing. To compensate for volume falls, tobacco companies are paring costs and raising prices in mature markets like Western Europe and the U.S.

London-based BAT, which competes with U.S.-based global market leader Philip Morris International Inc. PM -0.19% and U.K.-based peer Imperial Tobacco Group PLC (IMT.LN), said organic sales rose 5% in the three months to March 31 on a constant currency basis, boosted by pricing gains.

Volumes fell 2.4% to 164 billion cigarettes in the quarter from 168 billion in the same period last year. Stripping out these acquisitions, volumes fell 1.8%. Most regions showed a drop in volumes from last year although Eastern Europe, the Middle East and Africa posted a flat performance.

"This good performance was achieved in trading conditions which remain challenging, with industry volumes markedly lower in a number of market," the company said.

Global brand volumes rose 9%, with Kent up 16%, Dunhill up 6% and Pall Mall 10% higher. Lucky Strike volumes fell 4%, hit by declines in Spain.

BAT also said there were higher-than-expected shipments to Japan, where the environment remains "highly uncertain" following the earthquake last month.

At the end of February, BAT said it was on track to reach an operating margin target of 35% by 2012 after it rose to 33.5% from 31.4% last year, supported by production, supply chain and logistical savings. It also resumed its share buy-back program after suspending the scheme in 2009 during the economic downturn.

Students, Keller Hospital main beneficiaries of tobacco taxes

While Shoals cities send all their tobacco tax revenue to their respective general funds, county governments have specific purposes for the money raised by the sale of cigarettes, cigars, chewing tobacco and other products.

Tobacco taxes are commonly referred to as “sin taxes,” because they’re derived from the sale of products or activities that are frowned upon by some members of a community.

Taxes on alcohol also fall into this category, and in some cases, taxes on soft drinks are considered sin taxes.

Regardless of its origin, the money can provide a revenue boost to cash-strapped cities and counties.

Florence, Muscle Shoals, Sheffield and Tuscumbia place their tobacco tax revenue into their general funds where it is used for help pay for various city functions.

Sin taxes have been used to pay for stadiums in the U.S., while in Sweden taxes on gambling are used to help people with gambling problems.

“It’s not huge,” Sheffield City Clerk Clayton Kelly said. “But $70,000, $80,000 hits you pretty hard if you didn’t have it.”

Unlike the cities, Colbert, Franklin and Lauderdale counties have specific purposes for their tobacco tax revenue.

Of the three, Franklin County is the most creative, using tobacco taxes to fund a college scholarship program and to provide additional money to the Franklin County Fire and Rescue Squad and the Franklin County Water Authority.

“None of it goes into our general fund,” Franklin County Administrator Crista Martin said.

Martin said the Franklin County Scholarship Fund is open to any Franklin County resident who is attending college in Alabama. The applicant must be a full-time student and maintain a 2.0 grade point average, she said.

The amounts of the scholarships vary depending on how much money is in the fund and the number of scholarship applicants, Martin said.

Martin said the scholarships are awarded annually for spring and fall semesters. Approved applicants will receive their money after they complete the semesters they applied for. The deadline to apply is June 30, and students can reapply each year.

“When it first started, there was a good bit more money in it than there is now,” Martin said. “When you have 100-150 people who apply and meet the criteria, it depletes the fund.”

Helen Keller Hospital is the sole beneficiary of tobacco taxes in Colbert County after the cost of purchasing tax stamps and paying someone to administer the program is deducted.

The tax was created in 1957 and was known as the “Colbert County Public Hospital Tax.” The proceeds of the tax were to be used for “acquiring, constructing, equipping, enlarging, improving, operating and maintaining” a hospital in Colbert County.

The act was amended in 1994 to add a 5-cent tax on “little cigars.”

In addition to the tobacco tax revenue, a 1982 legislative act provides that two-fifths of the county’s local beer tax revenue is earmarked for the county’s hospital fund.

The hospital received about $230,000 in 2010 from the county in the form of tobacco and beer taxes.

The act regarding beer was sponsored by the late Rep. Joe Goodwin, D-Muscle Shoals, when Colbert County voters approved the legal sale of alcohol in 1982.

Colbert County, Muscle Shoals, Sheffield and Tuscumbia school systems each receive one-tenth of the beer taxes and one-fifth goes to the county’s general fund.

James Brumley, the county’s general fund accountant, said total tobacco taxes have fallen slightly during the past couple of years while the cost of collecting the taxes has increased.

The amount of tobacco tax revenue going to the hospital has decreased from $109,856 in 2004 to $35,531 in 2010.

“The cost of collecting the tax has gone up a good bit with the increasing cost of printing the actual stamps that are placed on the tobacco products.” Brumley said. “This explains the reduction in monies that the hospital actually receives and the fluctuations.”

Colbert County Commissioner Jimmy Gardiner said he knew the hospital received a portion of the county’s beer tax revenue, but not the tobacco taxes.

“I was not aware it was that much of the tobacco taxes,” he said. “With the deficits at Keller Hospital, they need that more than ever right now.”

A Keller Hospital spokeswoman said the sin tax revenue is placed in the hospital’s general fund.

Lauderdale County Administrator Jenoice Bevis said tobacco taxes are split between the county and Florence city school systems after expenses are deducted.

“There was an act that set ours up,” Bevis said. “It doesn’t generate a lot of money.”

Cigarette sales drop 10.1% in FY 2010, largest fall on record

Sales of cigarettes in Japan in fiscal 2010 plunged 10.1 percent from a year earlier to 210.2 billion cigarettes, marking the largest fall on record, due to a sharp rise in prices, the Tobacco Institute of Japan said Friday.

The decline in sales, the sharpest since comparable date became available in 1990, stemmed from weakening demand as cigarette prices spiked following the imposition of the largest-ever tobacco tax hike on Oct. 1.

The sales value in the business year ended March increased 2.0 percent from the year before to 3,616.3 billion yen, the institute said.

By cigarette brand, Seven Stars topped the ranking for the third straight year, accounting for 4.8 percent of the sales volume.

DRS reminds retailers against cigarette making machines

Hartford, CT - The Connecticut Department of Revenue Services (DRS) today reminded cigarette and tobacco retailers that the use of commercial cigarette-making machines by unlicensed manufacturers is illegal. Commercial cigarette making machines require a Connecticut cigarette manufacturer’s license and compliance with fire-safety, packaging, and other requirements. Retailers that continue to offer the use of such commercial “roll-your-own” cigarette machines may be charged with a misdemeanor and subject to arrest.

DRS Commissioner Kevin Sullivan said, “Connecticut is one of a number of states that have concluded that the use of commercial cigarette-making machines at retail establishments constitutes the illegal manufacture and sale of cigarettes. Issues that range from the proper licensing of the retailer and compliance with the Connecticut Tobacco Directory, to the ingredients in the tobacco and fire safety of the cigarettes, make this a practice that cannot be allowed in Connecticut.”

Commissioner Sullivan said DRS issued Policy Statement 2011(1), “The Use of Commercial Cigarette-Making Machine in a Retail Establishment,” to explain the agency’s position on the matter and outline the penalties for non-compliance. In addition to facing thousands of dollars in fines and potential arrest, retailers that defy the law may also lose their cigarette or tobacco products license and could face federal penalties.

“This is a no win situation for merchants who think they can get around state tax law to sell cheaper cigarettes,” Commissioner Sullivan said. “By manufacturing cigarettes on their premises, these businesses are actually exposing themselves to a host of rules and regulations they never anticipated. It just isn’t worth it.”

Vermont governor, lawmakers at odds over taxing cigarettes, dentists

Still haggling over how to close a $176 million budget gap, Vermont lawmakers and Gov. Peter Shumlin are at odds over whether to boost taxes on cigarettes and a separate plan to extend a provider "assessment" already in place for other health care providers to dentists.

The Senate Finance Committee has passed legislation that would add a $1-per-pack tax to Vermont's cigarette tax, but Shumlin opposes it.

The Democratic governor said Wednesday the state's tax revenues would take a hit because people would go to New York and Massachusetts to buy their cigarettes. Vermont would lose out on tax revenue from both the purchases of cigarettes and anything else smokers might buy in the same transaction, he said.

Currently, Vermont's per-pack cigarette tax is among the region's lowest, at $2.24. If the $1 boost is approved, it would go to $3.24.

New York's tax is $4.35 per pack, and Massachusetts' is $2.51.

"We know that right now, we're getting more sales, more people doing business in Vermont stores, because we're lower than our two big neighbors — New York and Massachusetts," Shumlin said Wednesday. "When we're higher than them, we lose those sales."

Tina Zuk, coordinator of the Coalition for a Tobacco Free Vermont, told lawmakers earlier this month that higher taxes on tobacco discourage its use. She says the annual price tag for smoking-related problems and loss of productivity from it is $425 million in Vermont.

Instead of the cigarette tax boost, Shumlin wants lawmakers to sign off on a 3 percent provider tax on dentists, which would help the state draw down about $4 million in federal funds that would help improve Medicaid and Medicare reimbursement rates.

State Senate President Pro Tem John Campbell says he'd rather not tax those services because they provide a benefit to Vermonters' health.

He says taxing cigarettes makes more sense because it would tax a habit that contributes to rising government health care expenditures.

"Dental health is a key component to our physical health," said state Senate President Pro Tem John Campbell. "I would rather not tax something that is providing a benefit to our physical health and at the same time tax something that we know is harmful and that will end up causing more medical costs, whether it be emphysema or cancers or what have you. To me, it's a no-brainer," said Campbell, D-Windsor.