Published May 1, 2007 | May 2007 issue
How far would you go for a smoke? If you're in South Dakota, it's likely you're at least willing to drive across the state border. That's the apparent message from a recent $1 increase in the state's cigarette tax.
Vendors have said that cigarette sales in the state have dropped 30 percent to 40 percent since the first of the year. For stores near the state border, the drop was much steeper, as residents drove to Iowa and Nebraska, which have lower cigarette taxes. A Wall Street Journal report said that a single Mini-Mart in Iowa sold $160,000 in cigarettes in January, which was triple the amount normally sold in a year at the convenience store.
State officials point out that this drop was expected to a degree, because smokers often either make major purchases before the new tax hits or drive to avoid the tax once it is implemented. Officials expect a rebound (to a 15 percent decline) if other states' experience is any indicator.
Still, the availability of cheaper smokes just over the state border has other ramifications. Residents bringing back cigarettes from another state are technically breaking the law, but enforcement is difficult. The state Legislature considered an anti-bootlegging law, complete with significant fines and jail sentences for those caught with more than 30 cartons, but ultimately failed to pass it.
—Ronald A. Wirtz