ANNAPOLIS – As many as 18 percent of jobs at Maryland businesses selling tobacco products could be lost if Gov. Parris N. Glendening’s proposed $1 per pack cigarette tax passes, convenience store representatives said in a news conference Thursday.
The Mid-Atlantic Petroleum Distributors Association and the Washington- Maryland-Delaware Service Station & Automotive Repair Association released a study that they said documents the effect the tax could have on Maryland’s border counties and retail areas. The study was funded by Philip Morris Management Corp.
If the tax passes, the cost of a carton of cigarettes would be raised $10. Based on price information from stores on both sides of the Maryland and Delaware borders, the study found consumers would pay an average price of $71 for two cartons in Maryland and $41 in Delaware. Tax opponents say the $30 difference would cause job losses and an increase in cross-border buying.
“Differences in state sales and excise tax rates between Maryland and Delaware have already driven shoppers and jobs to lower-tax Delaware,” said Pete Horrigan, MAPDA president and executive director, in a prepared statement. “The proposed cigarette tax increase would put Maryland retailers at the worst competitive disadvantage in the country.”
A Glendening spokesman defended the tax proposal, saying the governor is placing the health of Maryland’s children above all else when it comes to the tobacco tax.
“The governor has consistently said he sees the overwhelming benefit to this as the health of our children,” said Don Vandrey of Glendening’s press office. “We don’t foresee there’s going to be any significant decline in sales in Maryland that in any way counterbalances the health benefits for our children.”
“We believe the playing field for retail businesses should be as level as possible between neighboring states and that competition for customers should be based on business practices, not government-imposed price differences,” said Roy Littlefield, executive director of the service station organization.
The study was authored by William Lilley III and Laurence J. DeFranco, co- founders of InContext Inc.- a Washington-based international information company. It concludes that the $1 increase will create the highest combined sales and excise tax in the country – $19.71 – and would create the highest cross-border tax difference in the country.
“Differences in state sales and excise tax rates between Maryland and Delaware have already driven shoppers and jobs to lower-tax Delaware,” Lilley said in a statement. “Additional tax increases will take a situation that is bad for Maryland and make it much worse.
Key House and Senate committees are expected to vote on the tobacco tax today.
MAPDA is an organization of heating oil distributors and gasoline marketers that operate and supply about 900 convenience stores and gas stations throughout Maryland. MAPDA members employ over 10,000 people in those state businesses.