Another consideration is that artificially high tax rates often create black markets. More than half of all cigarettes in New York, and about one in three cigarettes in California, have been smuggled in.
While individuals often drive miles to save a few cents on fuel and tobacco, there is one place pricing doesn’t seem to impact sales. Starbucks has a very loyal, very young customer base; 40 percent of its customers are 18 to 24 years old. For these individuals, price doesn’t matter. I can assure you my teenager doesn’t care how much of her allowance she spends on Starbucks because it’s cool, it’s fun to drink and it makes her and her friends feel “more grownup.”
This is the place where the cheapest item is a plain cup of coffee for about $3, and yet these kids choose far more costly options.
What should Georgia do? We should continue to reduce the “cool factor” of smoking by earmarking a greater percentage of existing taxes to continue the “it’s not cool” message with teens, as has always been intended. The earlier we educate our youth, the less we have to spend in the future. Asking Georgia retailers to take on the burden of higher taxes is definitely not cool.
Angela Holland is vice president of association services for the Georgia Association of Convenience Stores.