Stogie Alert: Stop the 20,000% Cigar Tax Increase

We were planning on posting a review or commentary today, but then we arrived home and found ourselves bombarded with emails from various cigar retailers.

As it turns out, those idiots up on Capitol Hill are preparing to engage in the worst kind of bullying: They are proposing to raise taxes on cigars from 5 cents to $9.95 per stick.

To fill you in on the details, here is a statement by JR Cigars head Lew Rothman, which is similar to many of the other emails we received:

Everyone, and I mean everyone, that even smokes a cigar now and then has to be on alert for messages from all smoke shops and Internet vendors and manufacturers in the next few days regarding the proposed new tax on tobacco products:

“The Senate Finance Committee has scheduled a markup on Tuesday, July 17 on legislation dealing with the State Children’s Health Insurance Program (SCHIP). The measure is expected to be reported out of committee. Funding would be almost totally via higher taxes on tobacco products. The cigarette tax will increase by $.61 to $1 per pack effective after December 31, 2007. Other tobacco products would be taxed as follows: large cigars – 53.13% of mfr’s or importer’s sales price, but not more than $10.00 per cigar.”

In addition, there will be a floor stocks tax on tobacco products manufactured in the U.S. or imported into the U.S. which are removed before January 1, 2008 and held on that date for sale. The person holding the product on January 1, 2008 is liable for the tax to be paid on or before April 1, 2008.

YES! You read that right! $10.00 PER CIGAR, plus whatever your local state tax is. The people in Washington have absolutely no clue about the cigar business. Their sole focus is on cigarettes and we are about to get dragged along with it.

Not only will this put virtually every manufacturer, wholesaler, and retailer out of business, it will also devastate the economy of Nicaragua, Honduras, The Dominican Republic, and also have a significant impact on Puerto Rico, Indonesia, Costa Rica, Panama, Brazil, and Peru. (Whereupon, I’m sure the USA will be called upon to provide additional relief funding!).

You and everyone else who has any thoughts about continuing to smoke cigars or grow, sort, manufacture, distribute, or retail cigars need to make a concerted phone, mail, and e-mail bombardment of Congress very shortly. Hopefully, someone more adept at interpreting this new tax law will supply the proper language for this protest.

Be ready and be vocal, and be outraged because this tax is definitely outrageous. It is my firm belief that if passed as it stands right now the entire industry will collapse prior to April 1, 2008 (appropriately named April Fools Day for the Fools we have running the government right now) because no one will have the finances to pay the tax on their inventory.

We’ve long argued against punitive tobacco taxes – which we’ve noted simply pick on a minority that already pays more than its fair share. But this proposal blows all other proposed tax increases out of the water. And even if you think the SCHIP is something worth funding, you should still oppose a regressive tax on tobacco that singles out a small and already heavily discriminated group.

That’s why we’re asking every reader to contact both their Senators today and tell them you oppose raising taxes on cigars to fund SCHIP legislation. Their numbers can be found here.

-Patrick S

Tags: cigars