Tax hike prompting a run on cigarettes

In Illinois the owners of some convenience stores say that it is difficult for them to resupply cigarettes because people are stocking up ahead of forthcoming increase in cigarette tax.

The owners say that the state is prohibiting the dispensation of tax stamps that should be fixed to cigarette packages before they are sold at retail.

Male smoker

Man smoking a cigarette

This spring The Illinois General Assembly increased the state tax on cigarettes by $1, to $1.98 per pack. The increase becomes operational June 24.

William Fleischli, executive vice-president of the Illinois Association of Convenience Stores, said that smokers are purchasing beforehand of the increase.

“It’s not Warren Buffett purchasing 10 million cigarettes,” Fleischli said. “It is a person that usually gets 1 carton of cigarettes, but now wants to buy 2 or 3, attempting to save $18 or $20.

“We are running out of product. The Department of Revenue won’t provide the distributors with any more cigarette stamps to purchase, and thus the distributors won’t be able to place the stamps on them and can’t sell them to us.”

Moreover, Greg Rivara, Revenue spokesman, declared that now the state raised the number of stamps distributors by 25 % to adapt both a seasonal rise in demand and a probable run on cigarettes in expectation of the tax increase.

In early May, Revenue informed about its attempt to restrict distributors to their usual supply of stamps. They said it was aimed to prevent a run on stamps if the tax were raised.

“The unexpected and unjust distribution of stamp availability since May is now starting to break the availability of cigarettes to retailers and eventually customers,” the Illinois Association of Wholesale Distributors said in a statement. The association would not elaborate.

Carl Adams, vice-president of Ayerco Convenience Centers, said he is transmitting supplies among the company’s 30 shops to spread supplies as long as possible. Adams said that now his supplier can not order more than usual.

Adams said that this is a problem. That is not good enough when smoking people are purchasing cigarette cartons rather than packs. People want to purchase cigarettes before the tax increase happens.

Lawmakers endorsed the $1 cigarette tax increase and a comparable increase in other tobacco taxes to help plug a $2.7 billion hole in the state’s Medicaid program. The tobacco taxes are considered to bring in $350 million, which will be matched with $350 million in federal funds to cover $700 million of Medicaid costs.

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