For years, New Jersey’s small business owners — especially convenience store operators — have shouldered the financial consequences of well-intentioned but misguided policy decisions. Now, yet again, Trenton is eyeing another tobacco tax hike — this time a 30¢ per pack increase on cigarettes and as much as 50¢ more per vaping cartridge — that will harm businesses.
Let’s be clear: this isn’t just about smokers. It’s about small businesses, lost revenue, and New Jersey’s competitive disadvantage.
For small businesses like convenience stores, tobacco sales aren’t about promoting a product — they’re about survival. These products drive foot traffic, and when that traffic disappears, so does the revenue from the coffee, snacks, drinks, lottery tickets, and other essentials that customers pick up along the way. In fact, more than one-third of in-store sales in convenience stores come from tobacco products, making them a critical part of their business model. When New Jersey raises tobacco taxes, customers don’t quit smoking — they cross state lines. In a state bordered by Pennsylvania and Delaware, both of which have lower tobacco taxes, raising our own taxes simply incentivizes smuggling and cross-border purchases. It’s not a coincidence that New York has the nation’s highest tax rate on tobacco products and the highest inbound smuggling activity, with 54.3% of its cigarettes derived from smuggled sources. This means New Jersey loses current tobacco and sales tax revenue, local retailers lose sales, and illegal traffickers and out-of-state competitors’ profit.
Meanwhile, our state’s largely unenforced prohibition on flavored vaping products is driving sales of those products online, to dealers who don’t pay the current excise or sales taxes. Increasing the tax rate only on honest business owners will drive even more sales to the illegal market. A recent tobacco tax increase in neighboring New York triggered a predictable pattern: lost revenue for retailers, decreased tax collections, and a surge in illicit cigarette sales. Today, New York is an empire of cigarette smuggling and the nation’s leader in black market tobacco products. Why would New Jersey want to repeat that mistake?
Some proponents of the tax increase argue it’s about public health. While it’s important to reduce tobacco use, there’s scant evidence that marginal tax increases like this one achieve meaningful reductions in smoking rates. What they do accomplish is to harm small businesses while emboldening a black market that operates without age checks, product safety regulations, or any regard for public health.
Lawmakers should take a broader view. Small business owners are already battling inflation, labor shortages, supply chain disruptions, tariffs, and increased regulatory burdens. In 2024, 46% of New Jersey’s businesses were substantially impacted by inflation, up from 36% in 2023. Another tax, particularly one that drives customers out of state, could be the tipping point for some.
New Jersey needs policies that support small businesses, not ones that punish them. Legislators should reject the tax hikes of 30¢ per pack on cigarettes and 20¢ per milliliter on vaping products, not in support of smoking, but in support of small business survival, economic competitiveness and common sense.
Eric Blomgren is the executive director of the New Jersey Gasoline, C-Store and Automotive Association, which represents over 1,500 small business owners in the gasoline service station, convenience store and automotive repair industries.
