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Tobacco Tax Estimates Remain Right On Target

Money flowing into the state from the higher cigarette tax remain on target, with economists Wednesday sticking by earlier forecasts that a dollar per pack boost enacted this spring will pull in $850 million this year.

The cash-flow is strong even as cigarette sales fell with higher prices – particularly in North Florida counties adjacent to states with cheaper smokes.

“I think the legislation is working exactly as we’d hoped,” said Rep. Jim Waldman, D-Coconut Creek, who sponsored the cigarette tax hike last spring. “Not only are we bringing in more revenue, we are reducing consumption.”

Waldman downplayed the impact of cross-border sales. But statistics compiled by the Department of Business and Professional Regulation, which tracks sales, show the biggest declines are in border counties – raising questions about whether people are smoking less, or just traveling out-of-state to get cigarettes.

Surcharges on cigarettes are lower in both states bordering Florida, Alabama and Georgia.

In June, before the new Florida fee kicked in, what DBPR labeled border counties sold 9.1 million packs of cigarettes, a level inflated somewhat by retailers and smokers stocking-up before the boost. By comparison, last month 5.2 million packs were sold – a 43 percent drop, records show.

Statewide, 620,600 fewer packs of cigarettes were sold in October than during the previous, pre-tax increase September – amounting to a statewide decline in sales of less than 1 percent.

But for the year, economists are predicting 932 million packs will be sold – a drop of 25 percent from 2008-09.

The Revenue Estimating Conference, which focused on the cigarette-tax forecast Wednesday, agreed to maintain an earlier projection that the levy will draw $850 million of additional revenue this year, even though tax collections on all tobacco products actually have exceeded forecasts by $15.6 million so far this budget year.

Lawmakers earlier this year added $1 a pack to the state cigarette tax to make $1.34 per pack. The change came close to the same time that Washington increased the federal cigarette tax by 62 cents.

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