Opponents: No tax hike on tobacco

By Marc Kovac | March 26, 2015 at 12:00a.m.

COLUMBUS

Businesses that sell tobacco products and e-cigarettes urged state lawmakers Tuesday to drop tax increases and related law changes included in Gov. John Kasich’s biennial budget proposal.

The language as written, they said, would push consumers to other states or to online retailers to buy the products and force Ohio’s small retailers out of business.

“This means that family-owned, law-abiding retail businesses will be losing business at 70 mph,” said David Newman, owner of Valley Tobacco in Austintown and Cigarette World in Salem. “Moreover, residents will also turn to the Internet to order tobacco products to avoid paying any state excise taxes or sales taxes. In that scenario, both retailers and the state of Ohio lose.”

He added, “The state Legislature should not adopt tax policies that force residents to travel to other states to save money, penalize hardworking business people and jeopardize our employees’ jobs.”

Newman offered testimony before the Ohio House Finance Committee, which is considering the governor’s two-year spending plan.

Among other tax-reform measures, Kasich has proposed increasing the cigarette tax to $2.25 per pack from $1.25 and equalizing tax rates on other tobacco products, including electronic cigarettes.

Backers say the move will push some Ohioans to stop smoking, with the increased collections used to cut other tax rates.

But industry groups and others counter the higher tax will simply push the smoking public to buy their cigarettes and related products from other states or from online retailers to avoid paying the higher taxes.

“If you raise the [other tobacco products] tax, then no small-business tax cut of any kind will matter because our businesses won’t be here any more,” said Jim Clark, president of the Ohio Premium Cigar and Pipe Association.

Supporters of the emerging e-cigarette industry say the tax increase will take away one option smokers are using to kick the habit.

Scott Eley, president of the Ohio Vapor Trade Association, said the cost of the liquid used for such electronic products would rise from $18 to $27 per bottle to potentially more than $100.

“The end result is the closing of several hundred small businesses in Ohio that exclusively sell vapor products,” he said.