HORACE LANGFORD JR. / PVT James Gallahger, owner of Ghetto Mart Smok'n Parts, points out that federal excise taxes on tobacco and related items increased substantially on April 1. Advertisement

If you're a smoker, unless you stashed a few cartons of cigarettes away before April 1, you have already been hit by new federal taxes on tobacco products.

In fact, smokers in Pahrump are experiencing shortages of their favorite brands or size of cigarettes, according to James Gallagher, the owner of The Ghetto Mart Smok'n Parts on Pahrump Valley Blvd., across from the Big O Tire store.

"We had to pay a floor stocks tax rate for all the products we had on hand when the rates changed April 1," said Gallagher. The floor tax is the difference between the tax rate in effect on March 31 and the new rate on April 1.

For instance, the tax on 1,000 large cigarettes (6 1/2 inch or less long) was $40.95. The new tax rate jumped to $105.69, meaning cigarette sellers had to pay the difference of $64.74 in additional taxes for the cigarettes they had in stock.

"That can be rough if you have a large stock and a small amount of cash on hand," said Gallagher. "I feel sorry for people in that situation. Think about having a large stock and needing to come up with ten grand. You may not be able to do it."

In 2008, the federal and state governments raised nearly $35.2 billion in tobacco-related revenue from a combination of all tobacco excise taxes, sales taxes, and tobacco settlement payments to the states.

But that's not enough to pay for the new children's heath care initiative signed into law by President Obama on Feb. 4. The $32.8 billion expansion of the State Children's Health Insurance Program, or SCHIP, program now includes 3.5 million previously uninsured children.

The expansion is being paid for by raising the federal excise tax (FET) on cigarettes to $1.01 per pack from the previous 39 cent-per-pack tax. Taxes on cigars and other tobacco products have also risen substantially.

On average, across the country, $3.10 per pack or 55.8% of the total price of a pack of cigarettes now consists of taxes or other government costs.

"Having to come up with all the additional tax money has caused a temporary shortage of cigarettes," explained Gallagher, who drives to Las Vegas five out of six days to restock at his wholesaler.

"Yesterday, I drove all over Las Vegas and could only come up with one carton of Marlboro Red 100's. I wound up going to three stores to get Marlboro Lights.

"It's rough," said Gallagher. "Even Sam's Club in Green Valley has to build their stock back."

As a result of higher prices and limited supply, customers at Ghetto Mart are trying other brands. "Marlboro and Camel are the main national brands people buy, but now they are trying generic cigarettes. I'm selling a lot of Wildhorse and USA brands."

Cigarette size cigars, called little cigars, that sold for $2.09 a week ago are now $3.89 a pack. "I'm actually losing five cents a pack on those, but I just couldn't raise them any higher.

"I've got a real good price on Pall Mall because they have a sales promotion on, but when the promo is over they'll go up to almost $4.00 a pack."

To help retailers, the government gave store owners a one-time $500 credit to apply toward the excise floor tax. "That helped a lot," said Gallagher.

He says he thinks Ghetto Mart has the lowest prices in town.

"Sales are definitely down on cigarettes and tobacco. Definitely. But people are shopping around for prices and a lot of new people came into my store at the last minute before the prices went up. Business has picked up on other items besides tobacco." Gallagher said.

"I don't make any real money on tobacco anyway. Cigarettes are my draw, but how much can you make when you sell a pack of generic cigarettes for $2?"

Folks who roll their own smokes don't escape the increase. The tax on cigarette papers and tubes have also increased. The tax on a one pound bag of tobacco, which yields about two and a half cartons of cigarettes, used to be $1.10. Tax on that same bag is now $24.78.

Quickly doing the math, Gallahger noted his roll-you-own patrons will still save money over buying cigarettes by the pack or carton.

While business has slowed at Ghetto Mart, Gallahger said some people come in every day just to hang out in the pleasant atmosphere. In addition to cigarettes, the shop sells chewing tobacco, pipe tobacco, clothing, rocks, gems, jewelry and other smoking paraphernalia.

Gallahger also stocks a variety of fine cigars.