TEXARKANA, Ark. - Sellers of Cigarettes on the Arkansas side of this border town expect a big boost in business at the start of the new year, when Texas raises its tax on Cigarettes by $1 per pack.
The Texas-side tax hike goes into effect at the start of the new year. Prices at Arkansas-side businesses will go up, too, but only by 18 cents per pack to bring collections in line with the rest of the state. State law allows merchants in Arkansas border cities to collect less than the full state tax rate if the adjoining state has a lower tax rate than Arkansas, but the increase in Texas taxes means that state will now collect More per pack than Arkansas.
Curtis Garner, owner of Puff 'n' Stuff on North State Line Avenue in Texarkana, Texas, said the big difference in tax rates will drive business to the Arkansas side.
"It's going to kill it (cigarette sales)," he said, noting customers have said they'll go to the Arkansas side if they have to.
Garner said his business generated nearly $300,000 in cigarette taxes last year. But he doubts he'll match that level again. Once the tax change takes effect, a carton of Marlboros will be More than $40 at his store.
A Puff 'n' Stuff customer, Dennis O'Keefe, said he opposes the Texas tax hike.
"It's just a ploy to get money out of the little guy," he said. But he said the tax increase may change his shopping habits.
"I'll shop wherever I get the best deal," O'Keefe said.
On the Arkansas side, store proprietors selling Cigarettes are ready to welcome the new customers.
Kayla Whitehead, manager of liquor store BJ's Refreshments, said Cigarettes are a big seller.
"It's going to drive (customers) over here, and I think that's good ... that's going to benefit us, and I'm glad," Whitehead said.
Sang Kim, owner of the Speed-X Citgo gas station and convenience store on State Line Avenue, said beer, soda and Cigarettes make up the bulk of his business.
"I hope so because if the Texas side goes up, they're going to come here because its cheaper," he said.
In May, the Texas legislature voted to raise taxes starting in January on Cigarettes and tobacco products, putting the state tax at $1.41 for a pack of 20 and $1.76 for a pack of 25.
Arkansas state Rep. Steve Harrelson, D-Texarkana, said the law allowing border cities to lower the state tax to meet a bordering states cigarette tax has been in place since 1977.
He said the state tax rate in Texarkana, Ark., will be 59 cents a pack.
Information from: Texarkana Gazette, http://www.texarkanagazette.com
A service of the Associated Press(AP)