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Old March 18th, 2009, 06:51 PM
Hajo Flettner
Status: Offline
Hookah Legend
Join Date: May 2007
Posts: 4,746

Originally Posted by JillyIsJustKidding View Post
For retail and wholesale, right?

If its only $1 increase, why are we freaking out over a 250 gram tub? lol

I'd freak out if it was $10+ for 250. But c'mon now, its only a dollar.

If it ends up being a few bucks increase, honestly, wtf are we freaking out about? :P

Look at the other countries who have taxes, like Australia and Canada for example. I'm sure our new taxes are HEAVEN compared to what they have to pay.

I could be wrong, but if they increase is only a dollar, imo, there really is no reason to freak out unless you buy 5 250 gram tubs every 3 weeks or something.
The thing that you have wrong is that the prices won't increase just a buck per 250g. Instead, what happens is this:

1) The tax one the manufacturer goes up by lets say 10%
2) The wholesaler seeing his prices going up by 10% passes that increase along to the retailer.
3) The retailer gets hit with a 10% increase in his costs.
4) Anticipating an increase in demand consumers will, for a short time buy a lot more tobacco hoping to avoid higher prices later. This has already happened.
4) The consumer pays the compounded price increase after the 1st of the month.

Assuming that this tax increase will have the same effect as other tax increases on tobacco the following will happen:

A) consumption will fall roughly in proportion with the actual, compounded price increase after the 1st.
B) Larger retailers will temporarily accept lower profits attempting to hold the line on prices.
C) Smaller/marginally profitable wholesalers and retailers will go out of business.
D) Faced with lower sales volume, profits and less competition as a result of everything mentioned above prices will be raised to make up for lost revenue.

Bottom line, expect to see no moassel sell for less then $10 per 250g and and every thing to go up 2-4 bucks per 250g. You can also expect to see a lot less retailers since it won't be possible to make a living in the biz unless you have real purchasing power. Less competition means higher prices.
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