In Utah, businesses are starting to feel the effects of the tobacco tax increase. Read this August 24, 2010 article by Paul Nelson of KSL.com which interviews some of the retailers that the tax is punishing. It seems that some people may be finding cheaper tobacco products elsewhere, in turn hanging Utah businesses out to dry. Every one of Utah's neighboring states have a lesser cigarette tax (at least 90 cents less than Utah) except for Arizona at $2.00 a pack. This is surely part of the reason for decreased sales in the state.
As stated in this April 1 blog post “Governor Herbert Allows a Tax Increase: Not an April Fool’s Joke,” it is estimated that the tax increase will cost $43 million a year to taxpayers who buy tobacco products and $108 million over the next two years in lost revenue to the retailers that sell these products.
For a historically fiscally conservative state, Utah’s legislative action to raise taxes and the Governor’s inaction (refusing to veto, instead allowing the tax increase to take place without a signature) was a disappointment.