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Stogie News: U.S. Tax Hike Spells Devastation for Estelí

30 Aug 2007

Nicaraguan Cigar FactoryBetween the review of Cuban Crafters’ Don Kiki Brown Label Toro, the cigar manufacturing video, and yesterday’s review of a Don Pepin, this week’s material has almost exclusively revolved around Estelí. Perhaps that isn’t too surprising, especially when you consider the northern Nicaraguan city has some of the best tobacco-growing land in the world.

Since the Cuban Revolution of 1959, Estelí has been an asylum for Cuban cigar manufacturers seeking to escape communism’s stranglehold and maintain ownership of their businesses. As a result, significant segments of the budding population of 120,000 now earn comfortable salaries working in cigar factories to supply American demand. (Nicaragua is among the top three stogie suppliers to the U.S.)

But these jobs are in serious jeopardy. As this Chicago Tribune article explains, Estelí’s economy – and the frail economies of the entire cigar-producing region – would be devastated by Congress’ proposed tax hike.

“Government officials and industry leaders say thousands of jobs are at risk in Nicaragua, Honduras, and the Dominican Republic because of U.S. legislation that would hike taxes on cigars to help fund an expansion of children’s health insurance.”

In addition to the points I made in this July commentary, such looming economic damage is certainly worth noting when Congress reconvenes in September and attempts to reconcile the House and Senate versions of the proposed tax hike. Many of the benefits globalization has bestowed on the cigar-producing region would be forsaken – including high-paying jobs in Estelí.

“With cigars, bosses prize workers who master their company’s recipes and technique. To keep their workers happy, [the] Plasencia [factory] offers child care and tuition assistance for college. A cigar roller typically makes $100 a week, not a fortune but good pay in a country where most people make less than $7.”

While having to pay extra for our beloved hobby would be an inconvenience for cigar enthusiasts like you and me, the far-reaching effects of the tax hike would be nothing short of horrifying for the thousands who rely on the industry for their livelihood.

Not concerned about jobs in Nicaragua? Consider the economic devastation would include not only cigar rollers, tobacco harvesters, and others all across the Caribbean, but also hardworking retailers in the U.S.

Patrick A

Tags: cigars

20 Responses to “Stogie News: U.S. Tax Hike Spells Devastation for Estelí”

  1. Gordon Thursday, August 30, 2007 at 4:32 am #

    That's incredible! I had no idea some cigar manufacturers paid over 14 times the going rate for similar labor.

    Kind of makes me feel like the sticks in my humidor are doing more good than just keeping me happy…

  2. Michelle Thursday, August 30, 2007 at 11:45 am #

    So you’re saying in addition to putting U.S. retailers out of business, creating a black market, and increasing the price of cigars by up to 10,000 percent, the tax hike would devastate Third World countries?

    Sounds win-win to me…

  3. Frank Castle Thursday, August 30, 2007 at 2:58 pm #

    your sister is hot!

  4. Mac and Nudo Friday, August 31, 2007 at 4:44 am #

    There's a good article in today's New York Sun about the affect the tax hike will have on U.S. retailers. It's worth a read.

  5. Cigar Jack Friday, August 31, 2007 at 5:37 am #

    I heard a rumor that Nicaragua is actually going after the taxes via CAFTA saying that all cigar taxes are illegal I'm curious to see if that bears out.

Trackbacks and Pingbacks

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    […] 5. Increase congressional awareness. Organize congressional trips to the Dominican Republic, Nicaragua, and Honduras so lawmakers can see the plants, talk to workers, and get a feel for the economic impact of cigars in those nations. Back home, make sure every representative and senator knows all about the jobs related to cigars. And not just in shops and in Florida, but with operations like Finck in Texas, National in Indiana, tobacco farmers in Connecticut, etc. […]

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    […] 1) The House couldn’t muster enough votes yesterday to override SCHIP, a health insurance program for children from families who earn annual incomes at double the poverty level. The bill would have cost an additional $35 billion over the next five years, financed by hefty increases in federal tobacco taxes. Despite the fact that it would devastate much poorer children from cigar-producing countries such as Nicaragua, Honduras, and the Dominican Republic, Democrats on Capitol Hill have vowed revisions and promise to send Bush “another measure in two weeks of similar size and scope.” […]

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