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Tax hike leaves retailers, puffers smoking mad
An increase in Manitoba’s tobacco tax has some smokers and tobacconists worried about the holes it’s expected to burn through their wallets and bottom lines.
On Tues., April 16, the province announced an immediate four-cent hike in the tax, to 29 cents per cigarette, as part of its 2013 budget.
Peter Patel, owner of Up In Smoke Tobacconist, which has locations on Leila Avenue in Garden City and Henderson Highway in East Kildonan, said he was caught off guard when he first learned of the hike on the radio when news outlets started reporting details of the budget.
"People are mad," said Patel, adding he spent all of last Wednesday updating his prices and cash registers.
"They should be informed beforehand."
The increase amounts to an extra dollar per pack of 25 cigarettes and includes an extra four cents per gram on fine-cut and raw leaf tobacco. The province expects to bring in an extra $17.2 million from the tax, which will be redirected into health care.
Overall, Manitoba expects to collect $283 million from tobacco taxes this year. The increase makes Manitoba smokers the most heavily taxed in Canada.
"It’s a ripoff," said Chester Bake, an East Kildonan resident and smoker for the last 50 years.
Bake smokes about a pack every two days and says the increase will help him curb his habit.
He’s quit in the past and can do it again, he says.
However, the increase is also likely to encourage Bake to buy his smokes in the United States more often, where a carton of John Player Standard sells for $55 — about $40 less than prices here.
"It encourages me to slow down, let’s put it that way," Bake said.
With a federal tobacco increase in late March and an impending 1% PST hike in July, Patel fears he is being taxed out of business. Though he sells lotto tickets and some convenience items, tobacco accounts for 85% of his sales.
"I’m worried," said Patel, who bought the stores in January as a retail business to support his family.
"I don’t want to lose my sales."
Patel said the increases are complicating the sale of tobacco, noting seven documents he keeps beside his cash register outlining recent tax increases.
"Some customers are arguing with me about the price. I have to show them all of this," he said.
"Then they’re mad at the government asking why they didn’t give us notice."
There are around 187,000 smokers in Manitoba, or about 18.7% of the population, according to Health Canada surveys.
Manitoba hasn’t been the only province to raise tobacco taxes this year.
As part of its 2013 budget, Saskatchewan’s four-cent increase per cigarette is expected to bring in some $47 million in taxes the province says it needs to balance its budget. New Brunswick added an extra two cents to help tackle its $479-million deficit.
Health spending accounts for 43% of Manitoba’s budget, a provincial spokesperson said.
Much of that is going into general health revenues. The province will spend about $119,000 more this year on cessation programs and counselling in schools, the Lung Association of Manitoba and the Manitoba Tobacco Reduction Alliance.
The Western Convenience Stores Association, along with the National Coalition Against Contraband Tobacco and Imperial Tobacco Canada, issued releases condemning the tax increase, saying it promotes the sale of contraband tobacco.
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