Knoxville (WVLT) - Tennesseans recovering from the tax hike on cigarettes and tobacco may soon have to pay out more.
There's a proposal in the U.S. Senate to hike the tax on cigars, believe it or not, more than 20,000 percent!
The price of a cigar could go up as much as ten dollars a stick. Cigarettes could go up sixty cents a pack. After the recent state tax hike, many Tennesseans are turning to the internet, but beware.
Imagine getting a $4,000 bill for unpaid tax and sales tax for cigarettes you bought online. That's what happened to a Michigan woman. Hundreds of thousands of dollars are being collected from residents who purchased tobacco online and did not pay sales tax.
There are no clearing houses in Tennessee that sell cigarettes or cigars online. But if you purchase tobacco from another state, our law is clear.
We went online to check out prices and we found a significant markup. Although many sites don't charge a state sales tax, the markup is high and shipping costs are about six dollars a carton. Many sites claim to not report your purchase, but if they are subpoenaed, they will have to turn your information over to authorities.
With the federal tax hike being talked about in congress, cigar dealers are concerned about customers dropping off and going online to buy. One cigar stick could have a federal tax increase of up to ten dollars and cigarettes as much as sixty cents a pack. All to raise money for the state childrens' health insurance program.
Since the recent state sales tax hike, Smokin' Joe's owner Mike Hicks isn't surprised business is slow.
"I was expecting sales to be soft this month simply because so many people bought multiple cartons prior to the tax increase," Hicks says.
But if the federal tax ever passes, he says it could close his store.
President Bush has said he will veto the federal tax hike bill as it is now.