The tax on Cigarettes will nearly quadruple, and the tax on cigars, pipe tobacco and snuff will a little More than double.
The minimum markup that retailers must charge for Cigarettes will be going up, too.
“It’s a double whammy,” said House Minority Leader Christopher Rants, a Republican from Sioux City.
Democratic leaders said the new tax laws, which the House approved with a 58-40 vote Tuesday night, will save lives — and generate More mOney to support health care programs. Two members were absent.
The cigarette tax will jump from 36 cents to $1.36 a pack.
A pack of Doral, for instance, will go from $2.58 to $4.10 with the higher cigarette taxes and increased merchant markups, and sales tax on top. The law sets a minimum base price for Cigarettes to prevent promotional giveaways or major discounts.
The higher prices will kick in as soon as Gov. Chet Culver signs Senate File 128 into law, but Cigarettes with the lower tax will remain on store shelves until they sell out, state officials said.
To prevent stockpiling of the cheaper cigarette tax stamps, the Iowa Department of Revenue is monitoring distributors’ orders to make sure they’re not buying More than in the past, officials said.
The Extra mOney — at least the first $127.6 million generated each year — will be used for health care, such as treating smoking-related illnesses, or the treatment and prevention of substance abuse or tobacco use.
The average pack of Cigarettes now sells for $3.45, but smoking-caused costs in Iowa equal $8.04 per pack sold, said Rep. Pam Jochum, a Democrat from Dubuque.
The $1-a-pack tax hike is expected to cut the overall demand for Cigarettes by 19 percent, according to the nonpartisan Legislative Services Agency. About 20 percent of Iowa adults smoke, said anti-tobacco lobbyists, who pRedicted More than 20,000 current smokers will quit to avoid the higher tax.
Critics say it will push some Iowans to buy their Cigarettes across the border into Missouri, where the tax is only 17cents a pack, or into Nebraska, where it’s 64 cents.
Since January, when South Dakota’s cigarette tax jumped $1 to $1.53 a pack, South Dakotans have pouRed into Iowa for its 36-cents-a-pack tax, said merchants in Western Iowa.
The Larchwood Food Center, a grocery store about half an hour from Sioux Falls, S.D., had to ratchet up its cigarette order from 70 cartons a week to 2,000, said manager Vonda Scholten.
Supporters of the tax increase said research shows people eventually abandon the treks for cheaper Cigarettes.
“After two to three months, people go back to their old ways,” Jochum said. “It simply isn’t convenient. Not to mention the price of gas is too high.”
Republicans suggested the cigarette tax increase be 62 cents to make it equal with Illinois. Democrats, who hold the majority in the House, rejected that idea Tuesday night.
The tax on cigars and chewing tobacco will go from 22percent to 50 percent of the wholesale price, or a maximum increase of 50 cents a cigar.
State law prevents retailers from selling Cigarettes at less than cost, and this bill lets wholesalers and retailers charge More to cover their costs of doing business.
Rep. Dan Rasmussen, a Republican from Independence, said he doubts the Extra $500 a year he’ll spend on cigarette taxes, sales taxes and merchant profits will be enough to break his habit of smoking about 20 Kools a day.
“It’s very addictive, and it’s very harmful — we all know the effects,” he said. “I think most smokers will tell you they quit smoking every time they smoked their last cigarette.”
Rasmussen said it’s critical that some of the new mOney be spent to prevent children and teens from lighting up.
amy Johnson Boyle of Cedar Rapids agrees with that. Boyle’s father got hooked on the free Cigarettes the government handed out during World War II and died of emphysema at age 76. Her mother, 81, has never smoked but has asthma from inhaling her husband’s smoke.
“It breaks my heart when I see young people smoking,” Boyle said, “because I know what the end is going to be, and it’s not pretty.”