TAX-INCREASE DEADLINE PUFFS UP CIGARETTE SALES

It's a well-informed clientele at the San Jose discount store in
California known by the straightforward name of Cigarettes Cheaper.

They know the price is going up on Friday, the first day of the new
year, when a new state tax will raise the cost of cigarettes by 50
cents a pack.

A steady stream of customers flowed into the tiny store yesterday. And
more than a few were heeding a handwritten sign that exhorted them
to"stock up before Jan. 1st to save $5.00" on a carton of smokes.

"I'm buying now to beat the tax increase," said retiree Ralph Pepper,
clutching a plastic bag stuffed with seven cartons of Cambridge
cigarettes. Together, the cartons cost him around $150. With ten packs
in each carton, Pepper's purchase would cost him $35 more next week.

Though unwilling to disclose figures, several local retailers said
they're seeing a surge in tobacco sales this month - which they
attribute to the new tax enacted when voters narrowly approved
Proposition 10 in November.

The tax increase coincides with a price increase imposed by major
tobacco companies to help cover a recent legal settlement with state
governments that sued for the costs of treating cancer, emphysema and
other tobacco-related illnesses. By next month, the retail price for
cigarettes in California could be as high as $3.50 a pack.

"A few weeks before Christmas, it started," said Craig Butler at Mac's
Smoke Shop in Palo Alto. While the increase in sales hasn't been huge,
Butler said, he's noticed some regular customers are stocking up.

At some stores, the prospect has led to a run on popular brands - and
raises the suspicion that some would-be entrepreneurs may be hoping to
cash in by re-selling cigarettes illegally next month.

One man walked into a discount cigarette outlet on Sunday and bought
nearly $3,000 worth of Marlboros, according to store manager Nate Goddard.

The customer insisted he planned to keep them all for personal
consumption, said Goddard, who explained that as a retailer he's not
allowed to sell cigarettes for resale.

But a purchase that size is out of reach for many smokers.

"On the 31st, I'm going to buy as many cartons as I can - which isn't
going to be many," said Midge Camara, a 60-year-old nurse's aide who
smokes as much as two packs a day.

"A lot of people can't afford it," she said, stopping to light a
cigarette. " . . . This tax increase is making me so mad."

That's a sentiment shared by a lot of smokers. After purchasing her
weekly carton of Virginia Slims Lights, a 58-year-old bookkeeper who
gave her name only as Kathy made a derisive gesture with her fist and
said, "Tell Rob Reiner - sideways!"

Reiner, the Hollywood actor and director, was a leading advocate for
the November ballot measure that imposed the new tax in order to pay
for children's health and education programs. During the fall
campaign, initiative backers argued that the measure would help reduce
smoking and pay for important social services.

But not everyone believes the tax is going to convince smokers to stop
smoking.

"Cigarettes are a habit, like an addiction," said store manager
Goddard. The new tax affects cigars and other tobacco products as
well. Some retailers say they're expecting a slight drop-off in sales
next month, as customers come face to face with the new prices.

Consider 51-year-old Jerry, another customer at the Cigarettes Cheaper
store who didn't want to give his last name.

The retired ex-serviceman handed over $188.25 for 10 cartons of Basic
brand cigarettes yesterday. He said he'd been thinking about quitting
for a while, and the prospect of higher prices has given him more incentive.

But Jerry said he's stocking up because he doesn't plan to stop
smoking until March. That's when he also plans to buy a car.

"Ten cartons should about hold me until then," he said with a grin.
"If not, I'll probably be buying more."

Checked-by: Patrick Henry