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| Cigarette Tax Hurts Local Convenience Stores, Milk Bars |
| Source from:The Daily Telegraph 07/14/2010 |
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A TAX hike designed to make smokers butt out is instead threatening to close struggling milk bars.
With convenience stores relying on cigarette sales for up to 30 per cent of turnover, a 25 per cent increase in the Federal Budget excise has made many smokers bypass the corner store.
Convenience and Mixed Business Association executive director Domenic Greco said smokers were now heading to discount cigarette outlets and supermarkets to buy cigarettes on "special" instead of patronising their milk bar.
"This means that they are not only not buying their packets of cigarettes at milk bars but other discretionary items such as milk, bread, chocolate bars and the newspaper as well," he said.
Mr Greco said there were about 1000 milk bars and mixed businesses in Victoria.
He said cigarettes were a legal product but the constant increase in the excise tax meant smokers were now looking to buy cartons on "special" to save money.
He said while the increase was 25 per cent it was much more when you added other taxes.
"They are travelling further to buy cheap cigarettes which is false economy. It's a bit like people queuing up for hours with a 4 petrol discount coupon when they could get their petrol for a similar price across the road more quickly," he said.
He said the pursuit of cheaper cigarettes was also making some parents stockpile them, which meant they were more accessible to children.
"In most cases most adults say they started smoking by stealing cigarettes from their parents," he said.
"If you have a stockpile in the wardrobe it is an invitation for kids to smoke."
He described cigarettes as "price inelastic" which meant that people were happy to absorb a 50 to $1 increase but not much more, he said.
He said the tax meant that cigarettes had gone up about 30 per cent.
Lygon Convenience owner Hamid Jalal said the tax hit was unfair to battling small business owners.
Mr Jalal said the increase saw a packet of cigarettes selling for about $16.
"Some people are not buying them any more," he said.
"Some people are still buying them but they don't look too happy."
Mr Greco said the increasing cost of cigarettes meant businesses would face higher insurance premiums to cover the stock or else let their policies lapse and risk a theft.
"It has now become a hugely attractive theft item. I have members locking away cigarettes in a safe every night." Enditem |
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