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Tobacco tax revenue on the rise

Kesa Williams stocks a shelf with tobacco products Wednesday afternoon at the Cougar Minit Shop in Selma. (Jay Sowers | Times-Journal)

Kesa Williams stocks a shelf with tobacco products Wednesday afternoon at the Cougar Minit Shop in Selma. (Jay Sowers | Times-Journal)

Selma’s fiscal year 2014 tobacco tax revenue is significantly higher than the previous year, but the reason isn’t more people lighting up, according to business owners and city officials.

The city’s total tobacco tax revenue is up nearly $34,000 more than the 2013 fiscal year, according to the city’s latest tax returns. Though, convenience and tobacco store owners say overall traffic has decreased. The answer, according to city officials, is a measure that forced all stores to place small stamps on cigarette packages.

“I would think that [tax revenue] would be less,” said Labib Abdallah, who runs a gas station on the corner of Old Cahaba Road and Medical Center Parkway. “Right here, at my store, it’s dropped by half because of new stores opening.”

Abdallah said he’s noticed seven new tobacco or convenience stores that have opened in Selma in the previous two years.

Finest Tobacco, located just off of Broad Street, is one of the new stores. Though, the store’s manager Hakaam Kaid also reported less-than-steller traffic.

“I thought it would be a great location when I opened, with it being next to a major road,” Kaid said. “It’s been a lot less than what I thought it would be.”

With more store openings, Abdallah and Kaid said businesses are simply spreading out existing business.

“Customers aren’t going to smoke double just because of more stores,” Kaid said.

Two city councilmen say the answer to the increase was a 2013 decision to place stamps on all cigarette packages. It’s a decision that was partially made to ensure all businesses were contributing their fair share to the tax base, Ward 1 councilman Cecil Williamson said.

“Now we have means to tell who is paying tax properly, because the stamps are put on the packages by the wholesaler,” Williamson said.

Ward 5 councilman Sam Randolph echoed Williamson’s sentiments, saying many businesses were keeping sales tax profits for their own gain.

“They were basically just charging for sales tax and weren’t paying,” Randolph said. “When we brought back the stamps, it made [the stores] be honest.”

The increase in tobacco tax is a stark contrast to the overall sales tax revenue for fiscal year 2014. The city’s latest figures show a decrease of $127,000 through June.

Williamson and Randolph said the decrease isn’t due to a decline in business, but rather dishonest business owners.

“If a store owner sells $30,000 worth of goods and the sales tax paid is only $500, then you know something is wrong,” Randolph said.

Williamson said a solution to ensuring all sales tax revenue is collected could be pushing the Alabama Department of Revenue — the city’s tax collection agency — to audit businesses. The city specifically switched tax collection agencies in 2013 to address dishonest reporting by businesses.

Dallas County Probate Judge Kim Ballard said he wasn’t aware of any significant decrease in tobacco tax for county government. The county’s overall sales tax for the 2014 fiscal year is slightly more than the previous year, Ballard said. Though, he said Dallas County government’s finances aren’t identical to Selma’s finances and, therefore, wouldn’t be like “comparing apples to apples.”