Border-town retailers say they’re definitely seeing the effect of Iowa’s dollar-a-pack increase in the cigarette tax. John Greuniesen owns two Tobacco Hut stores in Council Bluffs, and he says he was anticipating a reduction in business when the cost went up. But he says it’s been worse than he expected.
He says at first he figured his stores would lose 25 to 35-percent, but it’s been worse, with one reporting sales down 43-percent and the other location losing 50-percent of its sales. Greuniesen also owns six stores in Omaha, and says while he’s lost business in Iowa, sales have increased across the river.
The stores in Nebraska had an immediate increase, he says. He says another franchisee is considering opening a new Nebraska store and closing a Tobacco Outlet they run on the Iowa side, and he says he may have to do the same. Greuniesen says it’s also forced him to reshuffle some jobs at his retail outlets.
He’s told three Iowa employees they can move to Nebraska or else he’ll lay them off. All three chose to go work in his Nebraska stores, so their wages are lost in Iowa and added to Nebraska’s business. He says other stores had to cut back hours and people. Greuniesen says he figures Iowa is losing sales to customers who leave to shop in other states, and also lost the business of people who used to drive into Iowa to buy smokes at what used to be a lower price.
Greuniesen says even though only 25-percent of the population smokes, one-third of the state’s population lives within 30 miles of a bordering state. He predicts that unemployment will increase and the tax revenues will stay the same or go down.
