State cig tax revenues surge in February but fall back in March
State cigarette tax collections jumped by more than 200 percent in February, but state revenue from cigarette sales could still fall short of projections for the full fiscal year if trends continue, according to the Legislative Fiscal Bureau.
According to collection numbers provided by the Department of Revenue, collections on cigarette taxes increased from $22.2 million in February 2007 to more than $67 million in February of this year. February is the first month where the impact of the $1-per-pack cigarette tax increase shows up in revenue numbers because retailers are given a month delay before they have to file returns and pay the tax, said Rob Reinhardt, a program supervisor with the LFB.
The tax increased from 77 cents to $1.77 per pack, a 129 percent increase.
The spike in February collections is due to the "floor tax" the state imposes on inventories retailers have on hand, Reinhardt said.
Preliminary numbers for March indicate the revenue boom has slowed. According to Reinhardt, March collections were about $40 million, roughly a 77 percent jump from the $22.6 million collected in March '07.
Cigarette sales from October of 2007 through March have resulted in tax collections of about $207.2 million, compared to about $120.6 million for the same period in 2006-07, according to the Revenue numbers, including the preliminary March numbers for this year. Reinhardt said while it’s too early to call it a trend, if collections continue at this rate the revenue from the cigarette tax would fall some $10 million below the $448.9 million projection from the LFB. In the last fiscal year, cigarette tax collections came to $296.1 million, Reinhardt said.
The cig tax boost has reached one goal -- an increase in revenues for the state. Whether it has accomplished the second goal -- to deter more people from smoking -- may be harder to pin down.
Maureen Busalacchi, executive director of SmokeFree Wisconsin, points to increased calls to the Wisconsin Tobacco Quit Line since January as evidence it has worked to curb smoking. The line registered an unprecedented number of calls in January with 13,585. The number of calls fell considerably in February, to 2,101, but the more than 15,000 calls over the two months more than equal the traffic over the previous two years, Busalacchi said.
"To be honest with you it has been beyond our wildest dreams," she said. "The quit line calls are so much higher than we expected that it kind of blew us away."
Matt Hauser, president of the Wisconsin Petroleum Marketers & Convenience Stores Association, said his retailers, especially those on the state border, have seen sales declines up to 30 percent.
"Our guess is 30 percent of adult smokers in Wisconsin didn't quit smoking in the last few months," Hauser says. "Those sales are likely going out of state or to the Internet. The state is not getting any revenue from those sales."
Below are cigarette tax collection numbers provided by the Department of Revenue:
FY 2006-07 FY 2007-08 Percent change
October $23,918,618 $21,930,716 -8.31%
November $26,712,531 $29,959,403 12.15%
December $24,793,968 $20,910,330 -15.66%
January $23,001,093 $27,346,301 18.89%
February $22,185,801 $67,078,195 202.35%
March $22,570,000 $40,060,000 (est.) 77.5%
Labels: Cigarette_Tax
