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"Business dropped off for a while and it caused a lot of complaining,"
Cindy Wilkinson, co-manager of Tobacco Place on Jefferson Street in
Dublin, said of the increased tax. "But people are going to smoke
regardless, and a lot of people said they can get them a lot cheaper
off the Internet."
Online cigarette dealers operate on the same rules as any other mail-order
service: If the company selling the product isn't based in Georgia,
the customer doesn't have to pay Georgia taxes, said Dennis Rich of
the Georgia Department of Revenue.
That means a 10-pack carton of cigarettes bought online will cost $3.70
less than a carton bought in a Georgia store. Some sites charge shipping
and handling, others don't.
To raise money during the state's a budget crunch, Georgia increased
the excise tax on cigarettes this year to 37 cents a pack, up from 12
cents. Until then, Georgia's tobacco tax had been one of the lowest
in the United States, so there was little reason for Georgia smokers
to purchase cigarettes online and avoid the tax, Rich said.
But now, Rich expects more Georgians to buy cigarettes through the Internet.
Many states have seen a spike in Internet sales shortly after an increase
in tobacco taxes, said Ali Davoudi, president of eSmokes.com and the
Online Tobacco Retailers Association. It's too early to determine whether
that is happening in Georgia, he said.
About 400 tobacco sellers currently are operating on the Internet, said
Davoudi. They have names like Dirtcheapcigs.com and
Silvercloudsmokeshop.com. Many, such as the Alllegany Indian Reservation's
Redjackettobacco.com, are operated by federally recognized American
Indian tribes.
Some lawmakers have worried that online tobacco retailers sell their
products to underage smokers. But Davoudi says his company pays an extra
$2.75 per order for UPS to obtain a 21-year-old's signature upon delivery.
"The average buyer of online tobacco is a 52-year-old woman. It's
not kids," Davoudi said. "Inherent in our business model is
the fact that we only sell by the carton and most kids don't have that
kind of disposable income. And you have to have a credit card to place
the order."
The higher tobacco taxes in Georgia could create a boon for black-market
cigarettes in stores and online, Davoudi and Rich said.
As an experiment, Brown & Williamson employees Tim Galoppa and Pat
Moore recently ordered two cartons from an online site. One carton was
fine, but Moore said the other was marked "for export P to be sold
outside the U.S. only."
"There are some things on the Internet that are legit, but that
carton had to be a black-market product," Moore said.