Federal tax hike puts pinch on smokers

Smokers are wondering what has happened to cigarette prices, some of which have jumped several dollars a carton or more in recent weeks, even though South Carolina lawmakers haven’t passed a tax increase. House Speaker Bobby Harrell says legislative consensus remains strong for a 50-cent-a-pack price hike. But that could be months away from even passing, much less implementation. The price hike reflects a =federal= price hike that just went into affect, of 62-cents a carton. Some cigarette prices jumped weeks before the federal tax was implemented.
South Carolina Commissioner of Agriculture Hugh Weathers says there is another market pressure taking place here, other than retailers passing on the tax to the customer. “We do see that when prices move up like that there is ‘push back,’ then a decline of domestic use of tobacco.  We’ve seen that trend for three or four years now, even without the price increase, involving smoking cessation programs and what not.” 
And Weathers says the new tax may affect South Carolina tobacco farmers.  “If it impacts the contract price they can receive for leaf tobacco, then it would have a negative affect, and we don’t know that yet.  The contracts for 2009 are probably already in place.”
He says for the short term, there is stability, but it may or may not last.   “But if a push back on consumption and a squeeze on the margins of processing tobacco, then unfortunately it will find its way back to the leaf grower and impact our acreage.” 
South Carolina tobacco growers now plant more than 21,000 acres.