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RECENT STUDY PROJECTS TOBACCO TAX HIKE WILL COST OAKLAND COUNTY 3,600 JOBS

 LANSING, Mich., Nov. 12 /PRNewswire/ -- The following was released today by Marketing Resource Group for a coalition of Michigan business groups:
 If you thought only smokers will bear the burden of the proposed 50 cent tobacco tax hike, think again. A recent study by Price Waterhouse projects Oakland County will lose about 3,600 jobs if the proposed tobacco tax hike passes the Legislature.
 Once the tax is tripled to 75 cents, Michigan will have the biggest cigarette and other tobacco products tax in the Midwest by far. Oakland County consumers could save a whopping $5.10 per carton across the border in Ohio, where the tax is 24 cents. Under these circumstances, it is projected that cigarette sales will fall by 25 percent -- due mainly to customers flocking across the border to save money. Michigan's proposed tax on other tobacco products will be about 50 percent higher than Indiana and Ohio's current tax.
 "For Oakland County wholesalers, retailers and small businesses, the result will be devastating," said Polly Reber of the Small Business Association of Michigan. "Businesses across the border in Ohio can't wait for the tobacco tax to pass."
 A coalition of business groups have joined forces to combat the threat of higher tobacco taxes in Michigan to finance schools. The coalition's growing list of groups currently consists of: Michigan Merchants Council, Michigan Distributors and Vendors Association, Inc., Small Business Association of Michigan, Associated Food Dealers of Michigan, Michigan Truck Stop Operators, Michigan Petroleum Association, Convenience Store Association of Michigan, Michigan Association of Convenience Stores, Chain Drug Store Association, Arbor Drugs, Rite Aid, Kroger, and A&P.
 "Many convenience stores will be in danger of layoffs or even closing their doors," said Reber. "Their No. 1 sales product is cigarettes, representing 22 percent of their sales."
 According to a county survey of U.S. convenience stores published by the Convenience Store News, the gross profit loss would be about $17,500 per convenience store. Oakland County cigarette sales would fall by about $51.9 million. In addition, county merchants would also experience a loss in sundry product sales as their customers purchase more bread, milk, candy and other items along with cigarettes as they shop across the border. These sundry product losses could be about $41.5 million.
 Gov. John Engler is considering legislation to triple the cigarette tax to 75 cents. Engler estimates that $300 million in revenue will be raised for school funding in this effort to replace the $6.5 billion in lost property tax revenues. Other tobacco products would be taxed at 66 percent of wholesale value and are expected to generate another $50 million in tax revenue. However, recent findings show these estimates to be overly optimistic.
 In addition, other concerned groups like the Michigan Chamber of Commerce, the Michigan Manufacturer's Association and the Detroit Renaissance Board have all endorsed school finance plans that exclude tobacco taxes. These groups are opposed to raising product-specific excise taxes, which puts Michigan at a competitive price disadvantage with other states.
 -0- 11/12/93
 /CONTACT: Tom Shields of Marketing Resource Group, 517-372-4400; or Polly Reber of Small Business Association of Michigan, 517-482-8788/


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Publication:PR Newswire
Date:Nov 12, 1993
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