Main | Thursday, March 28, 2013

Bloomberg: Set Minimum Price On Cigs

A pack of cigarettes usually costs $12 to $14 at NYC locations, but some retailers occasionally run tobacco industry promotions that bring the price down a few dollars. Mayor Bloomberg wants to end that practice by setting a minimum price of $10.50 in order to stem impulse purchases, particularly by young people.
According to a Federal Trade Commission report issued last year, the tobacco industry spent $6.5 billion on discounts in 2010, and Dr. Ribisl said they are one of the major ways cigarette makers encourage price-conscious customers like teenagers and low-income smokers to buy. City and state taxes already add $5.85 to the cost of every pack, the highest cigarette taxes in the country. About half of all states, including New York, also require wholesalers and retailers to mark the price of cigarettes up by a certain percentage. The laws were generally intended to protect business in small stores by preventing large chains from selling cigarettes below cost, as so-called loss leaders, which draw in customers. Mr. Bloomberg’s proposal, which will be taken up by the City Council, goes beyond those laws by specifying a minimum price.
Bloomberg's pricing bill is a companion item to last week's bill to force retailers to stock cigarettes out of view from customers. The minimum pricing bill also bans two-for-one sales and the offering of coupons.

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