Tax hikes sting customers, merchants

Local merchants are livid and customers are angry at new state tax increases that went into effect this week.

Many criticized the timing of the increases considering the struggling economy.

On Tuesday, increases kicked in for state sales taxes as well as excise taxes on beer, wine, liquor and cigarettes.

The state’s portion of the sales tax rose by 1 percentage point, increasing the combined state-local sales tax in Nash and Edgecombe counties to 7.75 percent.

The excise tax on a six-pack of beer increased about 5 cents.

The excise tax on wine increased about 4 cents per bottle.

The excise tax on liquor sold in Alcoholic Beverage Control stores increased 5 percent.

And the excise tax on a pack of cigarettes increased from 35 cents a pack to 45 cents.

An excise tax is a federal or state tax imposed on the manufacture and distribution of certain nonessential consumer goods. People who buy those goods pay the excise and sales tax.

Ike Jabbar, the owner of the tobacco store “Smokers Corners” on Country Club Road, said customers already are complaining about the $1 increase he has had to add to a carton of cigarettes to cover the excise tax increase.

“Some people already don’t like it,” he said. “They know it’s not my fault, but they still complain.”

Jabbar said the timing of the increase was poor.

“Every couple of months, something goes up,” he said. “To be honest with you, business dropped more than 35 percent from last year.”

On Wednesday morning, Leroy Bunn had driven around the corner of the shopping plaza from the Food Lion to Smokers Corner looking for a better deal on a carton of cigarettes.

“I went Food Lion and they told me it (the cigarette prices) went up, so I went here,” he said.

But Smokers Corner had not yet opened.

“I’m thinking about quitting (smoking),” he said.

Bunn said he is growing tired of North Carolina’s taxes.

“I’ve been down here four years,” said Bunn, who moved from Maryland. “I’m not crazy about all these taxes. I wish somebody could do something about it.”

Lance Rhodes, a store manager of the Food Lion on Country Club Road, said the sales ads at that store do not reflect the extra $1 that will have to be charged on a carton of cigarettes due to the excise tax increase.

As of Wednesday morning, he had not yet had a customer backlash.

“It will be coming,” he predicted.

Lee Long, who along with his wife owns Gator’s Sports Pub in Rocky Mount, said they recently raised drink prices about 25 cents in anticipation of the tax increase, which has begun to hurt business.

“It kind of makes me mad,” Long said. “What they are doing is taxing everyone to death at a time when no one has any money. OK, you’re broke. Now raise taxes.”

He said if government ran their operations like a business, it would make money. He said government needs to make cuts when revenues decline.

“No, they just want to raise taxes so they can spend the same amount,” he said.

Michael Walden, an economics professor at N.C. State University, said he expects the sales tax increase to only minimally affect consumer spending.

“I don’t think it will affect (spending) very much,” he said. “My guess is it will reduce consumption spending less than 1 percent.”

He said the sales tax increase will cost each household in North Carolina an extra $200 a year.

He doesn’t expect much change in the sales of liquor and cigarettes as a result of the excise tax increase.

“People who use those products aren’t very sensitive to the price,” he said. “You could argue they may get addicted to them or simply like the products, and it’s hard for them to change consumption.”

Jean Hiatt, who had purchased groceries including a 12-pack of beer from the Food Lion on Wednesday, said the tax increases wouldn’t affect her spending.

“It’s pretty much like it is,” she said. “Ms. (Gov. Bev) Perdue is going to do what she wants to do. I don’t like it, but I have to live with it.”