By Damian Ghigliotty and Matt Townsend
For years, savvy New York smokers avoided cigarette taxes and saved money by rolling their own.
But after President Barack Obama signed the Children’s Health Insurance bill in February, the taxes on a pound of roll-your-own tobacco jumped more than 2,000 percent from $1.10 to $24.78 when the law went into effect on April 1.
“I was buying regular packs of cigarettes before the price went up to $9,” said 21-year-old Eric Reeves of Brooklyn. “Then I started rolling my own. Now that the price of rolling tobacco is going up as well, it’s hard to say which one will save me more money.”
City smokers already faced the highest cigarette taxes in the country at $5.26 per pack. Add a recent bump in the state’s non-cigarette tobacco tax and the price of roll-your-own, once a cheaper alternative to cigarettes, has doubled to as much as $10 a pouch within the five boroughs.
Now as New York delis, pharmacies and smoke shops have begun raising prices on roll-your-own tobacco, smokers are seeking out the last of the pre-tax inventory.
“They’re running all over the city looking for cheaper prices,” said Dhillon Singh, a sales clerk at Village Cigar in the West Village.
The federal government has taxed tobacco products since the early 1950’s, but roll-your-own tobacco was exempt until a 96-cent tax was imposed on every pound in 2000. The tax rose to $1.10 in 2002, and remained unchanged until congress increased it in April to mirror taxes on regular cigarettes, according to congress’s Joint Committee on Taxation. A typical pouch of roll-your-own tobacco makes 40 cigarettes and is now taxed at 5 cents per smoke, the same as a pack of Marlboros.
“These products have been perceived to be replacements for cigarettes,” said Darreyl Jayson, vice president for the Tobacco Merchants Association, a non-profit trade group. “The thought was that these should go up to an equal level.”
The state began taxing all non-cigarette tobacco, including roll-your-own, in 1989 at 15 percent of wholesale prices. On April 7, state lawmakers increased that tax from 37 percent to 46 percent as part of the budget. The state separately taxes a pack of cigarettes at $2.75 and the city adds another $1.50.
“The hope is that if New York can get the prices on alternative forms of tobacco up, we can discourage the next generations from picking up smoking,” said Julianne Hart, the New York State director of advocacy for the American Heart Association. “The tax revenue can be used for other important public health programs, which are desperately in need of revenue right now.”
As a result of the tax increases on all forms of tobacco, the Department of Health projects that 20,000 of the city’s 1 million smokers will quit.
“Before you were paying half as much and getting twice as many smokes, so rolling your own was the obvious choice,” said Philip Nicolazzo, 23, a Brooklyn resident who works for the U.S Census Bureau. ” I really don’t know what I’m going to do at this point. I might have to quit smoking.”
But die-hard smokers looking for a deal still have alternatives.
Joe Kearns, a 49-year-old homeless man, recently sat on a bench outside the Classic Smoke Shop in Greenwich Village and said a few weeks ago he would have been puffing on Top tobacco, one of cheapest brands of roll-your-own, for $2.50 a pouch. But now that it’s doubled to $5, he’d rather bum cigarettes and smoke thrown-away cigars he finds on the street.
“I’m not going to pay $5 for that,” he said.
Mohamed Khlid, owner of the Classic Smoke Shop for the past 10 years, said roll-your-own sales have fallen 75 percent since the tax increase.
“It’s not just 50 cents, it’s doubled,” Khlid said. “People are shocked.”
The tax increase has also forced some tobacco companies to discontinue roll-your-own products. The Seneca-Cayuga Tribal Tobacco Corporation, based in Grove Oklahoma, stopped selling its one-pound bags of Skydancer rolling tobacco after demand plummeted.
“The people just don’t want it anymore,” said Seneca general manager Steve McCormick. “What’s happening across the board is people are going back to cigarettes.”