That still leaves $3.35 per pack on the table if the average cost is $6.00 per pack. You stated the States & Feds got the lion's share in an earlier post. It appears otherwise looking at this basic per pack accounting. Even if the tobacco company split the $3.35 with retailers they get $1.68 per pack.
Now, lets look at a carton. $1.68 multiplied by 10 is $16.80 per carton. Let me say a consumer buys 2 cartons a month. The tobacco company then gets, $33.60 per month. Multiplying that by 12 months is $403.20. Let us say we have 1,000 such consumers. That comes to $403,200.00 per year per 1,000 consumers. At 1 million it is $403,200,000.00 per year, or just a bit over 400 million per year for the tobacco company.
We can agree that the tobacco companies likely do not split profits with retailers so cleanly. I would suspect retailers only see about 25% return if they're lucky, and it may likely be closer to 10%. $403.20 multiplied by 25% = $100.80 & multiplied by 10% = $40.32. Either seems charming as far as incentive to peddle cigarettes. Cigarettes though are not the only tobacco product, tobacco companies sell.
Tobacco companies sell an image and a brand too. One I know does indeed sell shirts, other apparel, sporting goods, tools, lighters, ashtrays. I think then it shows tobacco companies do better off than your earlier post suggested. Sorry, I do not quite see your logic that States & Feds fare better than tobacco companies. Yes, tobacco companies do obviously bribe State & Feds to allow for loopholes. I will concede that requires tobacco companies losing some revenue. In compare though, they still fare a lot better than you've suggested.
First off you said...
"You stated the States & Feds got the lion's share in an earlier post. "
I never said any such thing in this thread, nor any other thread. I only stated here that the gov't is raking in $32-40 Billion a year on taxes and MSA payments, a number easily cited. I defy you to link to a thread where I used the term "lion's share". I've already done the search
. And just out of curiosity, assuming I said what you claim, which I decidedly did not, what precisely is the minimum percentage of a lion's share?
If you are going to hold me to something I said in some other thread, perhaps you should link me back to it so I can defend whatever I said that seems to have upset you? I
have stated elsewhere that the govt gets roughly 65% of all cigarette sales, and they do nothing for it. The gov't doesn't buy the tobacco, process it, or pay any distribution costs, nor the rent on the retail store and sales clerk payroll, etc., etc, etc. Gov't simply runs a cash register, raking in around 2/3 of the total retail dollar of cigarettes. And in NYC and Chicago, it is probably over 80%.
You said...
"That still leaves $3.35 per pack on the table if the average cost is $6.00 per pack."
Your calculation is in error, you failing to include a per pack allocation of MSA payments not included in my estimate of $2.65 in state and federal excise taxes. I assume you also failed to account for average retail sales taxes, which I would estimate at about 6%. Assuming your per pack average cost is the counter price before said retail sales tax. If we add in an estimate of $0.60/pk for MSA payments and $0.36 for retail sales tax we now come to $3.61/pk, or 60% of the retail sales price for the gov't cut, only 5% less than my estimates elsewhere on this forum and since it is a clear majority of the revenue would qualify in my opinion as a Lion's Share. And that's using your retail price, which you failed to cite a source for.
So let's see if my 65% can be substantiated with facts, using real numbers known to me...
Virginia (a very low tax state, the lowest in the nation)
Federal Excise: $1.02
State Excise: $0.30
State MSA (est)$0.60
Total: $1.92
I bought Tahoe branded cigs for $2.70/pk, leaving $0.78/pk split between tobacco maker and retailer. That's 71% going to the govt,
plus about 7% sales tax, I think. I don't recall the price of Marlboros and other expensive brands. Might have been $4.00 or so, maybe someone from Virginia can fill in that number. I do know that Tahoe was very popular in the outlets I bought them from, far outselling Marlboro. At the current price of cigs, even in Va where they are relatively cheap, most people are smoking Nattie Boh, not pricey fine wines like Marlboro.
Maryland (12th highest excise tax in the nation)...
has a minimum price level and I don't know exactly how that impacts pricing, except that I know the cheapest cigs I could buy were Pall Mall at just under $5/pk. Maryland does not permit the sale of cheaper brands like Tahoe, and other brands I've seen in Virginia (some even cheaper than Tahoes but I was always advised they were garbage). In a grocery store this morning I saw Marlboro regular Red's priced at $60.50/ctn and the tip top price was $71/ctn for L&M.
Federal Excise: $1.02
State Excise: $2.00
State MSA (est)$0.60
Total: $3.62
For Pall Mall at $5/pk retail, that left $1.38 split between retailer and manufacturer. The gov't gets $3.62 (72%), plus 6% retail sales tax ($.30), totaling $3.92 on a $5.30 total sale, or
74%.
For Marlboro Red's at $6.05 retail, that leaves $2.42 for the retailer/manufacturer, and $3.62 + $0.36 sales tax = $3.98 for the govt, on a total sale of $6.41, or
62%.
For the most expensive $7.10 packs, a brand I never see outside of a display case (L&M) that's $3.48 for the retailer/manufacturer and $3.62 + $0.43 sales tax, totaling $4.05 for gov't or
54%.
So in every case the gov't rakes in a minimum of 54% and up to 74%. I'm a stickler for facts, and when I present a number I always have a basis for it, in this case my 65% overall estimated take by gov't.
As far as BT selling TShirts and other nick nacks, what does that have to
do with anything I said, which was limited to the gov't share of retail cigarette sales?? Again, I defy you to point to any statement I made suggesting BT was short changed. The only one getting short changed around here is the consumer.
(BT/Fed/ST collusion)
