Ohio to raise taxes on flavored cigars

The products are popular among youths and some don’t think higher tax will stop use.


Taxes are going up in Ohio on tobacco products such as flavored cigars and cigarillos and for the first time in years, state money will aid smoking prevention efforts.

The two-year state budget bill passed last month raises the tax only on little cigars, from 17 percent to 37 percent of the wholesale price beginning Oct. 1. Little cigars resemble cigarettes but are wrapped in brown paper that contains some tobacco leaf, sold individually or in packs and come in flavors such as grape and strawberry.

The tax hike is estimated to generate $5 million each year toward the state’s general revenue fund, according to the Ohio Department of Taxation. An additional $5 million over two years has been set aside in the state budget to enforce Ohio’s smoke-free workplace law and boost prevention and cessation programs.

The state has not funded these efforts since 2008, when lawmakers and then-Gov. Ted Strickland gave up $18 billion in future payments from a multi-state settlement with tobacco companies in order to balance the budget in a recession year and build new schools.

Bruce Barcelo, healthy lifestyle manager for the Dayton-Montgomery Public Health District, said the tax increase should decrease usage among young and urban Ohioans who often use flavored tobacco products.

“We would like to see the equalization for all other products but certainly this is a good first step,” Barcelo said. “We know in the urban core that the mini cigars, or cigarillos, are one of the main ‘other tobacco’ products that are being consumed.”

But wholesalers and store owners worry sales will take a hit. Gregory Wellinghoff, owner of tobacco wholesaler Keilson Dayton Co., expects a 10 to 20 percent decline in sales on little cigars and fears the tax will encourage “trunk slammers” that sell tobacco products from states neighboring states such as Pennsylvania with lower taxes.

“The higher the tax, the more incentive for someone to find a way to not pay the tax and make extra profit as a result,” said Wellinghoff.

Wellinghoff said most consumers of little cigars fall in the mid-30s to mid-60s age range and many are middle- to lower-income people who can’t afford a pack of cigarettes but enjoy smoking.

About 14 percent of Ohio high school students reported smoking cigars or little cigars in the past month in a 2011 survey of youth health habits, compared to 21 percent who said they smoked cigarettes. Barcelo said the little cigars are attractive to smokers, in part, because they cost less than a pack of cigarettes.

“Of all populations, youth are very much price sensitive — every time that a tobacco product is increased, it impacts usage,” Barcelo said. If taxes on all non-cigarette products were raised to the same rates as cigarettes, Barcelo said, tobacco sales would generate $50 million a year.

The Montgomery County Juvenile Court received 145 referrals for tobacco related offenses in 2011. James Cole, the court’s administrator, said Black and Milds and other flavored cigars are common products of choice among young people.

“I don’t think the tax will influence the number of youth that will be cited. They’ll find a way even if there is a higher price on this product,” Cole said.

Cole said tobacco cessation programs through the court seem to help young people drop the habit more than raising the price of the product.

The Centers for Disease Control and Prevention recommend tobacco tax increases, as well as smoke-free workplace laws and prevention programs to reduce smoking rates.

The new state budget directs money toward several areas including:

  • $1.5 million to support and encourage use of the state’s free quit hotline for pregnant women, Medicaid participants and uninsured Ohioans
  • $1.5 million to raise awareness and of Ohio’s workplace law and fund cessation and youth prevention programs
  • $1 million to help pregnant women quit smoking

 

Mandy Burketts of the Ohio Department of Health said the cessation and prevention money would likely flow to local health districts and other anti-tobacco coalitions already offering programs. When the state cut its funding, many local programs died and the few remaining are funded through local human services levies and partnerships with hospitals, schools and other organizations.

New money will be spent on enforcing the state’s smoke-free workplace law. More than 781,000 violations have been issued, on average, over the past four years, but less than 200,000 have been issued so far in 2013, according to the Ohio Department of Health.

Burketts said Ohio’s tobacco use problem isn’t going away and most adult smokers began as youth. Ohioans between the ages of 18 and 34 have the highest smoking rates among adult age groups, according to the 2011 Ohio Risk Behavior Survey.

Elliot Leventhal, a 23-year-old Ohio State graduate from Dayton, smokes cigarettes but said a tax on little cigars makes sense as a luxury.

“People will still buy them at the same rate, and if the government can make money on this I want it to go to good causes,” Leventhal said.


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