This year, Californians voted to increase a tax on cigarettes and other tobacco products, including e-cigarettes, by $2 per pack. The measure passed by 62.9 percent, and the revenue generated will go to Medi-Cal and other programs that aim to both prevent people from starting smoking and help fund the treatment of tobacco-related health complications.
Heading into the election, Proposition 56 pit public health advocates against tobacco interests—especially the e-cigarette industry, which was not subject to the state's tobacco tax before.
But with the tax increase set to go into effect statewide on April 1st, 2017, we were curious what it meant for the owners and employees of local corner store and tobacco shops. Do they expect the large price increase to have a major affect on their businesses?
To find out, we went around to some familiar faces and asked some questions.
Ribhi Mohammed of O'Looney's (588 Haight St.)
What are your feelings on the new tax?
The cigarette tax is a stupid thing, because heavy smokers are going to continue to smoke, and most heavy smokers already don't have that much money. They already have money problems and telling them to pay for that extra $2 instead of just forcing upon the cigarette companies and not allowing to send it back to the consumer is wrong.
But everyone keeps saying, 'Oh it's for the kids, it's for the kids.' Well, if it is for the kids, why won't the parents be better parents and take care of their kids so they don't smoke. Why force other people to take care of their own kids by charging them more money?
Are you doing anything in order to prepare for the price hike?
We are giving warnings to our customers that the prices will be going up, and we are also trying to stock up. But the problem is, when you're a shop, you pay all those taxes at the first of the month, so if we don't sell those cartons, we will have lots of taxes to pay. It's kind of a losing situation for everybody. I don't make that much money off of cigarettes, but a lot of people come in because of the cigarettes.
I also don't know what's going to happen with our contracts with the cigarette companies, and I'm worried that they might take them away.
Why is that?
Because they are going to see that the price is going to go up and that we aren't selling as much, so they could come in and remove their contract, or they could come in and start putting up more posters, and we have to accept that. Under our contract, we have a discount if we agree to put up a whole bunch of signs for them.
Salim Nasser of New Star-Ell Liquor (501 Divisadero St.)
What are your thoughts on the new tax?
I mean, tax is tax. The state wants the tax, they have a good excuse from a medical standpoint. A lot of people get cancer, so they want to try to stop people from smoking. Is it going to stop people from smoking? No, it's not. It's going to make people think about stop smoking, and eventually maybe they will. But $11 a pack is a good idea, but it's not going to affect my business.
So you don't think it will slow down business?
I don't think so. We have seen cigarette prices increase from a dollar, to four dollars, to five dollars, to seven dollars, and people still smoke. It may decrease it, I'm not sure, but I think the main idea is to deter people from smoking. Well good luck to them.
Will you be doing anything to prepare for the increase?
There's nothing really to do. We will be changing the prices and doing our regular mark up in the same way.
Danny Ho, Manager at Haight Ashbury Tobacco Center (1524 Haight St.)
What are your feelings about the new tobacco tax?
I can't believe people voted for it, that's all I can say. $2 extra a pack is going to be really expensive, just like New York. The truth is, nobody is going to just raise prices just two dollars. They are going to end up costing more. People are going to be really pissed.
Will it affect your business?
Yeah. I mean, people right now are already complaining, and I already have customers asking me when the law is going to take effect, so they can buy more before.
The state is also working out a taxing structure on e-cigarettes. Will this affect that area of your business?
I didn't know about that. But even if it will be affected, I would say it's still cheaper because they last longer. Honestly, since I don't know how much the tax would be, I can't really comment on the effect it will have. I can tell you that the price of liquid has gone down over over the years. A container that would cost $12 now costs $8. So even if the tax increases drive the price up, business will still be stable.
What are you doing to prepare for the tax in general?
Basically, before the price goes up, we will buy as many cartons as possible. But even that will just benefit us more than the customer.
Charlie Jaber of H & W Liquors (801 Hayes St.)
What do you think about the new tax?
As a smoker, obviously I don't like it, but as a father, obviously I do like it. I keep in mind that I don't want my nieces and nephews smoking in the future either. There are definitely good and bad things to it.
From a business standpoint, I don't think it will slow down the price of cigarettes. Smokers are smokers. People who want to smoke are going to continue to smoke, I don't think a tax is going to affect it.
Are you doing anything to prepare?
We're just learning how to put more money on our end when it comes to our budget for buying cigarettes.
Wakeem Shehadeh of Oak Fair Market (999 Oak St.)
What are your feelings on the new tax?
Well, if they increase tax, and it will help people slow down on smoking, I'm for it. But sometimes, it takes a big chunk of their income, and they give it away for nothing. And that makes things hard on them. They have to pay rent, they have to buy food. All that extra money is going from their paycheck, and it could hurt the customer, because they can't stop smoking.
It might also cause crime, because packs of cigarettes become so expensive, and could cause people to steal more cigarettes.
Do you think the tax will affect your sales?
I'm very sure it will affect it a little bit. But this is not the point. The customer's health is more important then the revenue. If business slows down, I'll accept that result, and if business stays the same, I'll accept that result too.
What are your feelings on the new tax? Join the conversation in the comments.
And if you or someone you know is looking to quit smoking, the San Francisco Tobacco Free Project offers a list of local resources that offer assistance.
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