As a result of Department of Defense Tobacco Pricing Policy Effective 30 March 2017 & California (CA) Prop 56 Tobacco Excise Tax Effective 1 April 2017, Military Exchanges will experience a series of price increases over the next 90 days. Prices will reflect the final price paid for these same items as civilian retailers.
Tobacco products are excluded from price matching.
Why are tobacco prices changing?
On 8 April 2016, the Department of Defense (DoD) signed a memorandum that requires that “with respect to the pricing of tobacco products, pending revision of Department of Defense Instruction 1330.09, Armed Services Exchange Policy, December 7, 2005, prices in the United States (including territories and possessions) shall match the prevailing local price in the community, including the effect of all applicable taxes that local consumers pay when purchasing tobacco.
Outside the United States, prices shall fall within the range of prevailing prices for that same product established in outlets of the defense retail systems inside the United States.” Further guidance was issued in a 21 February 17 memo from the Office of the Secretary if Defense providing implementation details. DoD is committed to advancing the health, productivity, and readiness of the Military, and is making efforts to prevent initiation of tobacco use, help those who want to quit, and decrease exposure to second-hand smoke. Because price is a significant factor in tobacco cessation decisions, DoD believes this policy will make a meaningful improvement in the health of our military.
What tobacco products are included?
This policy applies to all tobacco products, including cigarettes, cigars, smokeless, ecigarettes and vaping.
Why are prices including the effect of sales tax? Aren’t purchases at military exchanges tax free?
All purchases at military exchanges are tax free. Customers are not paying sales tax when they purchase tobacco products at a military exchange. The new policy requires that the final price charged for tobacco products match the prevailing price in the local community, including the effect of sales tax paid. The “sticker price” of tobacco products in a military exchange should be similar to the final price of those same items at civilian retailers.
What facilities will be required to adjust tobacco prices?
This new DoD policy applies to all military retail outlets that sell tobacco products as well as to ships stores
How will this change affect all military retail facilities in a common market?
DoD resale outlets in the U.S. (to include morale, welfare, and recreation outlets that sell tobacco products) which substantially share the same local community will sell the same tobacco products at the same price. For shared markets outside the U.S., the exchange service representing the preponderance of the military population in the shared market will determine the price.
Will the MCX price match policy extend to tobacco products?
In accordance with Department of Defense policy, tobacco prices at all military exchanges shall reflect the prevailing price in the local community, including the effect of all applicable taxes. Therefore, the MCX price match policy will not extend to tobacco products.
Will MCX accept manufacturers’ coupons?
At this time, MCX does accept manufacturers’ coupons for tobacco products as it does for other products sold in MCX.