Tobacco retailers prepare for new taxes

The new tax plan that goes into effect July 1 includes changes to Kentucky's cigarette tax. While some businesses are telling their customers to stock up one owner told us he’s trying to reduce his inventory before the end of June.

That new tax adds $.50 per pack of 20 cigarettes sold in the state of Kentucky. Normally those taxes are first paid by wholesalers or retailers and then collected from smokers when the cigarettwes are sold. But one Lexington business owner says cigarettes that are already in his stock are also subject to that tax, so come next month he'll have to pay money to bring his stock in line with the current tax.

"We are reducing the total inventory on cigarettes because I don’t want to give the state five dollars, to be honest," Dale Ferguson owner of the Fayette Cigar Store said.

Ferguson says he'll increase that inventory once the deadline passes.

There have been signs at other businesses telling smokers to stock up on cartons before the increase, but Ferguson says his customers don't seem to be in a rush.

"A few have said they would buy an extra carton but the general reaction was 'Eh, it’s just another tax.'"

There was a plan by lawmakers to also raise the taxes on e-cigarettes, but it was scrapped just before the final vote. Ferguson says he doesn't understand that change.

"If the state is interested in this being a revenue flow, and a staple revenue flow for them, if the market moves from regular cigarettes to e-cigarette’s, they’re not going to maintain their tax flow," he said.