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Michigan to face hike in tax on cigarettes; Governor proposes levy of $2 per pack By LARRY P. VELLEQUETTE BLADE STAFF WRITER Sorry, but Lambertville resident Ted Ringer wonít be helping Michigan Gov. Jennifer Granholm fill a $1.3 billion hole in the stateís budget by paying a proposed higher tax on cigarettes. And her theory that raising the cigarette tax from the current $1.25 to $2 per pack will also encourage 60,000 Michigan adults like him to stop smoking is likewise unlikely, he said. As long, of course, as Ohio keeps its cigarette tax at a more reasonable 55 cents per pack. "Itís like half the price here," Mr. Ringer said yesterday as he purchased a carton of cigarettes at a convenience store along Alexis Road in Toledo. Like thousands of other Michigan smokers lucky enough to live near the Ohio state line, Mr. Ringer said yesterday that he will continue to buy his smokes south of the border. In doing so, he may avoid altogether the governorís proposal to hike Michiganís cigarette tax to the second-highest in the country, behind only New Jersey at $2.05 per pack. By comparison, Ohioís cigarette tax ranks 30th nationally. According to the Centers for Disease Control, nearly a quarter of Michiganís adult population smokes, compared to a national average of about 22.7 percent. "There are so many people that smoke in Michigan, especially up north," Mr. Ringer noted. "I donít know how they would be able to afford it." Gov. Granholm does not know how the state can replace the loss of federal funds for the stateís health-care program for low-income residents without the proposed cigarette tax increase, which would generate $295 million in new revenues. About half of the stateís current cigarette tax revenue of $860 million goes to public schools; most of the money from the proposed tax increase would go to fund $400 million in lost federal Medicaid funds and increase in state caseloads. The cigarette tax increase is part of the governorís budget plan for the next fiscal year beginning Oct. 1. It is expected to be presented to the Michigan House and Senate appropriations committees tomorrow. While Michiganís Republican-dominated legislature has not ruled out hiking the cigarette tax yet, Temperance grocer Jack Zeiler viewed the proposal as just another legislative brick Lansing would throw through the profit window of his store. "I used to have a whole wall of cigarettes here a few years ago," said the longtime owner of Zeilerís Farm Market on Lewis Avenue. "We used to sell them by the carton, and now Iím lucky if we can sell them by the pack." Mr. Zeiler said legislators in Lansing regularly ignore the impact on business owners near the state lines when making tax decisions. Michigan cigarette taxes were raised from 25 cents to 75 cents per pack in 1994 and from 75 cents to $1.25 per pack in 2002. He said his store was first put at a disadvantage to competitors in Ohio in 1978 when Michigan implemented its bottle deposit law, then voted to raise its sales tax to 6 percent in 1994. Then Ohio piled on two years ago by joining The Big Game, cutting his lottery revenues deeply. Michigan administrators believe that the increased tax will reduce cigarette sales by as much as 14 percent. A report by the U.S. Surgeon General indicates that a 10 percent increase in cigarette tax results in as many as 5 percent fewer smokers. But Merian Foster, a crew leader at Buddyís Mini-Mart on Secor Road in Toledoís Trilby neighborhood, said she believes a cigarette tax increase in Michigan will only keep her cash register and those of other Ohio retailers busier. "Iíd say probably half of our customers who buy cigarettes come from Michigan," Ms. Foster said. "A lot of them will come down and stock up for a whole month. Theyíll buy 10 cartons at a time, and most would rather come here than pay twice as much [for cigarettes] in Michigan. The price is just too high there." But Michigan law makes it illegal to buy cigarettes in other states or over the Internet and bring them into the state, the Michigan State Police Monroe post reminds. Violators caught with 60 cigarettes (3 packs) to 300 cigarettes (a carton and a half) without Michiganís state stamp on them could be guilty of a misdemeanor charge punishable by up to 90 days in jail plus a fine and court costs. If someone gets caught bringing from 300 to 2,999 cigarettes (just under 15 cartons), he or she faces a misdemeanor charge punishable by up to a year in jail plus fine and costs. At 3,000 cigarettes or above, violators are looking at a felony charge. Although Michigan State Police acknowledge that the cigarette stamp law has not been aggressively enforced, they point out that charges have been filed in some cases in which an individual is stopped for a traffic violation or arrested on other charges. In addition to criminal charges, violators could face civil penalties from the Michigan Department of Treasury.

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