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Stogie News: SCHIP Cigar Tax Increase to be Unveiled Today

13 Jan 2009

[UPDATE: According to the IPCPR, the tax cap will be 40 cents per large cigar. Please click here for their full press release. The tax portions of the bill can be downloaded here (pdf) and the full bill can be downloaded here (285 page pdf).]

Well, it looks like today we’ll all finally learn just what the new federal tax will be on cigars. No more speculation and rumor. The facts will be laid out in the bill to reauthorize the 11-year-old State Children’s Health Insurance Program (SCHIP), which is slated for a vote in the House of Representatives Wednesday or Thursday.

Federal budget crunchers were working the numbers Monday, trying to see if everything adds up. Apparently, the increased tax revenue—largely from a cigarette tax boost—isn’t now sufficient to expand and fund a five-year plan. So, there’s consideration of shortening the time frame and coming back again in a few years.

As I write this Monday night, the final SCHIP bill hasn’t been released. It’s anticipated this morning, and the first place you’re likely to find it is on the House Rules Committee site or on Groups involved with tobacco, such as the IPCPR and the National Association of Tobacco Outlets, will also be on top of it.

For most of you reading this, the heart of the issue is what happens with large cigars, the category that includes premium sticks. One provision that could have devastated small cigar shops, a floor tax on inventory, has been shelved. And the plan to boost the cap on individual cigars—currently about a nickel—appears also to have been scaled back.

When President Bush vetoed the previous SCHIP bill, the cap was $3. There has been intense lobbying to push it down more. A few weeks ago, a number of reports put the cap proposal at $1. Over the weekend, a couple of retail shop owners told me they’d heard the cap would be 40-45 cents. A GOP staffer on the Hill told Patrick S on Monday that he was hearing cap figures between 39 cents and $1.

Jeff Borysiewicz, an executive at the gigantic Corona Cigar Co. and executive vice president of Cigar Rights of America, said Monday night that even if the tax ends up at the lowest of those ranges, he won’t be satisfied.

“I don’t feel good about what’s happened,” he told me. The group was among those arguing for a percentage tax increase equivalent to the 156.4 percent boost for cigarettes. That would have put the cigar cap between 12 and 13 cents.

Borysiewicz said he’s convinced that a tax even in the 40-cent range will have significant negative repercussions on manufacturers, importers, retailers and customers as it ripples through the market.

As you read the figures in the new bill, bear this in mind: What you see today is almost certain to become law. SCHIP enjoys strong support from key GOP and Democratic lawmakers, and what the House approves is what the Senate will vote on. Though there has been a lot of talk about having the legislation ready for a Jan. 20 signing by President Obama on Inauguration Day, I’m told it’s highly unlikely the Senate will vote by then.

George E

photo credit: Stogie Guys

89 Responses to “Stogie News: SCHIP Cigar Tax Increase to be Unveiled Today”

  1. dmjones Tuesday, January 13, 2009 at 4:14 am #

    SCHIP: because "kids" up to 30 years of age in families making up to $80K annually just have to get the government to supply their medical care–c'mon you don't expect these families to do with a small LCD TV or fewer lattes do you?

  2. The Cigar Spy Tuesday, January 13, 2009 at 4:31 am #

    It's all good to me. I dont mind paying a little extra to help out 🙂 We all knew it was going to be around the $.50 to $1 for months. And honestly it doesnt bother me at all. It's just the price we pay for one of the finger things in life.

    All i care about is still being able to smoke in VA. If they take that way, then im mad. I'm also mad that my fellow BOTL's cant even smoke outside, now that bothers me. But paying a couple extra cents for my cigar to help out, not at all.

    Happy Smokin'!

    – dennis

  3. Liberty and Cigars o Tuesday, January 13, 2009 at 4:48 am #

    With all due respect, Dennis, you completely overlook how this bill will devastate much needier children and families in the cigar-producing region. While you might approve paying $1 more per cigar now, I doubt you would if you understood the far-reaching consequences SCHIP is about to impose.

    Patrick A wrote an excellent piece about how the town of Esteli, Nicaragua, is going to lose good jobs, many of which provide child care and scholarships. And since the vast majority of cigar rollers are women, they will be adversely affected. The same will be true across the Dominican and Honduras.

    Patrick also points out that “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.”

    It’s OK to want to help children or the poor, Dennis, but SCHIP poses serious unintended consequences. Such is often the case with well-intended government mandates that aim to redistribute wealth.

  4. Jarrod S Tuesday, January 13, 2009 at 5:10 am #

    This is the sort of insider information–complete with insider sources–that I would only expect from the Stogie Guys. Thanks for all you do for today's cigar smokers!

  5. jonsiddle Tuesday, January 13, 2009 at 5:10 am #

    I've done some reading on this the last time it came up in Congress and I have a serious problem supporting this as a child is defined until the age of 30.

    The other thing I worry about is at some point, this program may expand to include other items of interest that are not good for us. Soda and fast food immediately come to mind. The redistribution of wealth and increased government control over the people they supposedly serve worries me.

  6. dmjones Tuesday, January 13, 2009 at 5:57 am #

    Of course the program will expand to tax other items in the future…there's no other way it can continue to exist. As they increase taxes on tobacco products, more people will be encouraged to quit smoking, especially cigarettes. The supporters of these types of taxes claim that this is one of their goals. That's great, but then the revenue projections of the increased taxes fall short. If your family budget falls short for some reason, you cut back on spending; the government knows no rules like that, though. If their budget falls short because fewer people are paying taxes on whatever item (cigarettes, gas, income), they start looking for ways to raise taxes on other items. For instance, in Chicago a year or two ago, people started buying more bottled water rather than using tap water for drinking. The city utility ran a budget shortfall so the city council proposed raising taxes on bottled water to help the utility. The point here is that if non-smokers don't care about the taxes on tobacco products being raised, don't ask me to care about their sacred cow being axed when the blood's been exhausted from ours.

  7. Jerry @ The Stogie R Tuesday, January 13, 2009 at 6:58 am #

    Honestly, I'm with Dennis. I really don't care…we can get upset about it and bitch about it and blame the Dems and the Reps till we are blue in the face. Sure in a perfect world the Government would cut back and balance the budget but we all know that place is no where to be found. We all knew that this wasn't an IF SCHIP gets passed, but WHEN.

    I don't like it but what do we do? Do nothing? Let children go without preventative care so when they get older they are a bigger burden and turn around and say we should've had a program for early screening? What if you were a family depending on SCHIP, would you feel the same way? What do you do when there is a strong demand for what some call an essential program but no money to pay for it? Add to it no one wants to pay any additional taxes. Where does the money come from…you tax the "unhealthiest" habit till its dry and then move on to the next…

    I see both sides and I understand that people in other countries will suffer but in the end, as always, in every industry, the final buck gets passed to the customer and I'm okay with that.

  8. Jerry @ The Stogie R Tuesday, January 13, 2009 at 7:01 am #

    By "okay with that" I mean that I accept it since nothing can be done about it since cigar smokers don't make up enough of a voting block to have any impact.

  9. Patrick S Tuesday, January 13, 2009 at 7:35 am #

    Dennis and Jerry-

    I realize that people have different views of the role of government, so you may think that expanding SCHIP is a good thing while others don't.

    But accepting that this is something the government spend tax dollars on doesn't mean accepting how it government collects revenues to pay for it. They are two distinct issues and both need to stand on their own merits.

    If you accept that this is money well spent, the question is why is the burden being pushed onto such a small group of people (particularly considering that tobacco users tend to have less income than nonsmokers)? Why not a small increase on a tax that is widely distributed?

    The answer – of course – is that it is easier to pick on the weak and the unpopular, than to make the case that this is something we should all pay a little to support. But that is bullying, and my 8 year old sister knows that bullying is wrong.

  10. Charlie Tuesday, January 13, 2009 at 7:51 am #

    I don't have much of an issue with defining a child being 30 (although 25 seems more realistic to me) IF, and only if, the person is enrolled full-time in college. My fiancee lost her family's health care coverage when she turned 22. The coverage the university offers costs close to $3,500, which we cannot afford in addition to tuition and housing. We even contemplated getting married at the court house early just to get her insurance in the case of an emergency, prior to our regular wedding date.

    The biggest issue I had with SCHIP was the floor tax on B&Ms, so I'm glad to see that pulled. It would have put small shops like the one I work at out of business in a time when we should be encouraging small business investment.

  11. The Stogie Guys Tuesday, January 13, 2009 at 8:01 am #

    Got this press release from the Republican Ways and Means Committee. Passed along without comment:

    <p style="text-align: center;" align="center"><span style="font-size: 17pt;">Democrats Blowing Smoke on SCHIP Funding

    The Truth: Poor People Pay Today, We All Pay Tomorrow</span>

    <span style="font-size: 13pt;"> </span>

    <span style="font-size: 13pt;">Democrats have decided to pay for their proposal for a massive SCHIP expansion, which <span style="text-decoration: underline;">dilutes the focus on poor children</span>, with tens of billions of dollars in <span style="text-decoration: underline;">additional tobacco taxes</span>. </span>

    <p style="text-align: center;" align="center"><span style="font-size: 13pt;"><span style="color: windowtext; text-decoration: none;"><img src="; border="0" alt="" width="165" height="112" /></span></span>

    <p style="text-align: center;" align="center"><span style="font-size: 10pt;">Click on picture for video</span>

    <span style="font-size: 13pt;"> </span>

    <p style="margin-bottom: 13pt;"><span style="font-size: 13pt;">Short of <span style="text-decoration: underline;">finding at least 22.4 million new smokers</span> (the number required to adequately fund SCHIP) Democrats will be forced to either kick millions of children off of health insurance or <span style="text-decoration: underline;">raise taxes on all of us</span> by tens of billions of dollars. </span>

    <p style="text-align: center;" align="center"><span style="font-size: 13pt;"><span style="color: windowtext; text-decoration: none;"><img src="; border="0" alt="" width="172" height="115" /></span></span>

    <p style="text-align: center;" align="center"><span style="font-size: 10pt;">Click on picture for video</span>

    <span style="font-size: 13pt;"> </span>

    <span style="font-size: 13pt;">It is irresponsible to fund <span style="color: black;">a </span>children’s health program, particularly one targeted at vulnerable children, with a declining revenue stream. We cannot treat our nation’s children like a house that we abandon when we can no longer afford to make payments. </span>

    <span style="color: navy;"> </span>

    <span style="text-decoration: underline;">Revenue to Fund Expansion Will Soon Disappear, Causing All of Us to Pay More</span>:

    <ul style="margin-top: 0in;" type="disc">

    <li style="margin-bottom: 12pt;">The Democrats are proposing a permanent tobacco tax increase to pay for a temporary SCHIP eligibility expansion.

    But here’s the problem…the percentage of Americans who smoke has been dropping for decades. And research and logic both show that raising the prices of cigarettes will lead to less smoking.

    <p style="margin-left: 0.25in;">

    <ul style="margin-top: 0in;" type="disc">

    According to an analysis by the Heritage Foundation, the Democrats would<span style="color: navy;"> </span>need to recruit <span style="text-decoration: underline;"><a title="; href="; target="_blank" rel="nofollow"><span style="color: windowtext;">22.4 million new smokers by 2017</span></span> to keep funding their Medicaid and SCHIP expansion.

    <ul style="margin-top: 0in;" type="disc">

    At the same time the funding base will decline, SCHIP costs will increase exponentially. SCHIP costs increased 10 percent in 2007 and 18 percent in 2008. CBO predicts that SCHIP spending will more than double under the Democra<span style="color: black;">t</span>s<span style="color: black;">’</span> proposal. Couple that with a drop in revenue from decreased smoking and the gap between program spending and revenue becomes staggering—a gap Democrats will ask the American taxpayer to fill.

    <span style="text-decoration: underline;">Democrats will Raise Taxes on Poor and Low Income Families</span>:

    <ul style="margin-top: 0in;" type="disc">

    Tobacco taxes fall hardest on the working poor — the very people SCHIP was originally designed to help. According to the Campaign for Tobacco-Free Kids, 28.8 percent of adults who are below the poverty level smoke, compared to 20.3 percent of other adults.

    <p style="margin-left: 0.25in;">

    <ul style="margin-top: 0in;" type="disc">

    President Elect Obama promised that no one making less than $250,000 per year would see their taxes go up. This legislation breaks that promise.

    <p style="margin-left: 0.5in; text-indent: -0.25in;">

    <ul style="margin-top: 0in;" type="disc">

    According to the Centers for Disease Control, other groups disproportionately likely to smoke include: adults with a GED (46%), Native Americans (32%), adults without a high school diploma (27%), all blacks (23%) including black men (28%), and young adults ages 18-24 (24%).

    <p style="margin-left: 0.5in; text-indent: -0.25in;">

    <ul style="margin-top: 0in;" type="disc">

    In contrast, individuals with undergraduate degrees (only 10% of whom smoke) or graduate degrees (7%) would be far less likely to be affected. Given such data, it is hard to imagine a more regressive policy, disproportionately targeting such disadvantaged groups for higher taxes. Source: <a title="; href="; target="_blank" rel="nofollow"><span style="color: windowtext;"&gt <a href="http://;</span&gt;.” target=”_blank”>;</span&gt;.

    <span style="text-decoration: underline;">Democrats Add Tax Increases on Top of Tax Increases</span>:<span style="text-decoration: underline;"> </span>

    <ul style="margin-top: 0in;" type="disc">

    An additional 61 cents per pack to finance SCHIP expansion may not sound like much, but it adds up. Under the Democrats’ proposal, a working class family with two adult smokers would face hundreds of dollars per year in additional<span style="color: navy;"> </span>federal tobacco taxes.

    <p style="margin-left: 0.5in; text-indent: -0.25in;">

    <ul style="margin-top: 0in;" type="disc">

    That tax is in addition to state and local tobacco taxes, which are often hefty. These taxes are as high as $3.66 per pack in Chicago and $4.25 per pack in New York City. That adds up to thousands of dollars of government excise taxes per active smoker.

    <span style="text-decoration: underline;"><span style="text-decoration: none;"> </span></span>

    <span style="text-decoration: underline;">Is This Any Way to Stimulate the Economy?</span>:

    <ul style="margin-top: 0in;" type="disc">

    The Majority has time and time again argued that we need to put more money in the hands of low-income families, presumably because they will spend it. With this bill they can spend their stimulus payments by paying more taxes<span style="color: navy;">.</span>

    <p style="margin-left: 0.25in;">

    <ul style="margin-top: 0in;" type="disc">

    Speaker Pelosi suggested the recovery rebates would "help create 500,000 jobs" by the end of 2008. She suggested such relief was especially needed by "financially pressed Americans — putting money into the economy," supported by the fact that "economists estimate that each dollar…leads to $1.26 in economic growth." Americans might rightly wonder if dollars paid to financially pressed Americans are so stimulative, but wouldn't tax hikes on these same financially pressed individuals — taking money out of their pockets — do exactly the opposite?

    <ul style="margin-top: 0in;" type="disc">

    Driving up spending in the form of higher taxes will only stimulate an expansion of government and contract the rest of the economy.

    <p style="text-align: center;" align="center">###

    <span style="font-size: 11pt; font-family: "Palatino Linotype","serif";"> </span>

  12. Jerry @ The Stogie R Tuesday, January 13, 2009 at 8:16 am #

    Even the Press Release doesn't say what we can do…cause even they know the votes solid…like I said, pass the lube.

    Maybe living in DC all my life just gives me a jaded sense of politics. Nothing really changes here…

  13. cigarfan Tuesday, January 13, 2009 at 8:24 am #

    You're too much, Jerry. Pass the lube… But seriously, Stogie Guys — thanks for keeping on top of this. Just look out for Jerry and his lube. 🙂

  14. dmjones Tuesday, January 13, 2009 at 8:31 am #


    I disagree that this is money well spent. Constitutionally, the federal government has no duty and no right to provide health care for anybody. When they do it tends to be vastly inferior to privately available health care and it drives up the prices of the health care that everyone else is paying for.

    Something to think about: if you want to provide this service (debatable that it should be provided, but I'll skip that), should there be any new tax to pay for it? IMO, the federal government already collects more than enough in taxes and levies. The problem is not that there isn't enough revenue coming in–the problem is that they always spend more than they collect and the level of waste is just astronomical. I say no new taxes or tax increases until the assorted elected nitwits can use what they've already got properly.

  15. Mitchell Hislop Tuesday, January 13, 2009 at 8:46 am #

    Dennis and Jerry,

    Its Mitch from Next Generation Cigars. I just got a call from one of my lobbyist friends in DC, and apparently there is very little knowledge on what the tax will be. He is hearing rumors similar to what we are hearing, but he is also hearing higher ones as well. I am sure that it will be a race to see whether SG or gets updated with the news first. The meeting for the bill isnt till 5, and it hasn't even been numbered yet, so who knows when this will all go down. Thanks for being a great source, and hopefully cigar bloggers like us can help influence. While I agree with you, that we are not a large enough voting block, we usually have power friends (although mine, Norm Coleman R-MN is currently not seated), and we bloggers can usually make some noise when we have to.

    If you hear anything, please shoot me an email.

    Mitchell Hislop

  16. Mitchell Hislop Tuesday, January 13, 2009 at 8:48 am #

    Also, TARP is big in the news today, and is also on the docket for the same meeting as S-CHIP. Who knows what that will do.

  17. Mike Tuesday, January 13, 2009 at 10:46 am #

    Since it was a foregone conclusion that such a tax would pass in some form, it could have been much worse.

    I wonder if the $25 roll-your-own tax makes it cost the same as finished cigarettes.

  18. Jerry @ The Stogie R Tuesday, January 13, 2009 at 11:32 am #

    dmjones – I hear you and agree with some of what you said. Its not right, I don't like it, but it is what it is…and I can tell my wife that someone, some where is getting the health care they need thanks to me buying cigars.

  19. Jerry @ The Stogie Review Tuesday, January 13, 2009 at 1:11 pm #

    I agree with your Patrick…thats why I said “you tax the “unhealthiest” habit till its dry and then move on to the next…” I agree that this tax should be spread out but most folks want the “unhealthy smokers” to go first.

    Other than accepting it, what other option is there but to accept and deal with it? We don’t have the votes, they do…I don’t like it…but there isn’t much left to do…so pass the lube so its not so painful.

  20. Gilster Tuesday, January 13, 2009 at 1:53 pm #

    The MYO/RYO tobacco industry will be ruined by this tax on Roll-your-own tobacco.

    To go from $1.0969 per pound to $24.62 per pound is outrageous.

    Most of these companies are 'Mom & Pop' Family operations, much like the Cigar Industry.

  21. dmjones Tuesday, January 13, 2009 at 3:29 pm #


    And because you can tell her that, the general public of this country should never be hatin' on tobacco users…they should be throwing us a frickin' parade!

    The levels of taxation are not as bad as I feared they would be, but I still fear it's just the start. The most startling thing is the increase of the RYO tax. My step-son does the RYO specifically because they claim to not have the same additives that finished cigarettes have (if anyone can show evidence disputing this, I would be interested in seeing it) and because they are much cheaper than finished cigarettes. Faced with this kind of idiotic tax increase, I'm telling him to stock up on his tobacco in advance.

    I was going to stock up on cigars in advance as well, but if the cap holds at $.40 per stick, I probably won't do too much of that. I'm still against the increase on principal, and if I could avoid the tax by purchasing on an Indian reservation or something I would, but that price is at least not a deal-breaker.

  22. The Stogie Guys Tuesday, January 13, 2009 at 3:36 pm #
    SCHIP Legislation Introduced Including

    40-cent Cap on Premium Cigars

    International Premium Cigar & Pipe Retailers Association (IPCPR)

    Bill Looks for Easy Passage Through House of Representatives–House May Vote as Early as Thursday
    January 13, 2009 – The latest version of the State Children’s Health Insurance Program (SCHIP), HR2, has been officially introduced in House Ways & Means Committee. The industry compromise on the revised tax rate on large cigars has been incorporated into HR2. The new tax rate will be 52.4% with a maximum tax cap on any one cigar at 40 cents per cigar.
    In previous versions of SCHIP legislation, the tax cap rate held at $3 per cigar. Your trade association and its federal lobbyists, working in conjunction with the Cigar Association of America, our industry came together to agressively challenge the distasterous, proposed $3 tax cap, and get the substantially reduced to the more sustainable 40-cent tax cap.
    The IPCPR also recognizes the work of the associate members of your association, who were a key component in educating to Congress on our industry. Thank you to our retail members and their customers for supporting our aggressive grassroots efforts.
    While HR2 looks to breeze through the House, it may have a slower journey through the Senate, though we do not expect any direct changes to the tax cap rate.

    SCHIP Legislation Details
    The new tax rates are effective April 1, 2009;

    The cigarette tax rate goes from $.39 per pack to $1.00 per pack;
    The tax on snuff goes from $.585 per pound to $1.50 per pound;
    The tax on pipe tobacco goes from $1.0969 per pound to $2.8126 per pound;
    The tax on RYO goes from $1.0969 per pound to $24.62 per pound (not a typo).
    Additionally the definition of RYO has been expanded to include cigar wrappers to address the “blunt wraps” issue;
    The tax change to small cigars (cigars weighing less the three (3) pounds per thousand will be phased in over five (5) years at the following rates per year:
    2009 & 2010 – $.25 per pack
    2011 & 2012 – $.50 per pack
    2013 & 2014 – $.75 per pack
    2015 and beyond – $1.00 per pack
    We were successful in continuing to have the floor tax NOT apply to large cigars; however it does pertain to any other tobacco products.

    The International Premium Cigar & Pipe Retailers Association (IPCPR) is a not-for-profit trade association organized as the advocate for the independent retail tobacconist and recognized as the “Voice of Authority and Reason” on premium tobacco related issues.

  23. Don Tuesday, January 13, 2009 at 4:53 pm #

    The relationship between tobacco and health seldom seems to have distinctions made for how relatively harmless cigars and pipe tobacco are statistically. If the figures were looked at honestly, there would be no rationale for connecting them to a health bill other than the fact that “They are all tobacco”, as one politician has said. It amounts to discrimination by association.

    I believe Obama is intelligent and honest enough to see this and politically wise enough to not want to start his horrendous tasks off in this way for the sake of pleasing people who can’t make distinctions.

  24. The Cigar Spy Tuesday, January 13, 2009 at 5:33 pm #

    Some great points by everyone. Kudos to SG for the post and info! And thanks to everyone who added additional info, i learned some new stuff.

    You guys are right, we do get picked on because of our beautiful passion for cigars. We are and sadly most likely always be looked at in the wrong way. Which only makes it easier for us to get picked on.

    Life's tough, so smoke up! I hope they know we are not going anywhere and that im planning on a national herf day!! 🙂

    – dennis

  25. furious Tuesday, January 13, 2009 at 9:01 pm #

    Just another sad example of the U.S. taxpayer getting nickeled and dimed to death by big brother who knows better than us. I guarantee that SCHIP will cause a spike in purchases from the overseas and black markets from U.S. consumers.

  26. John Wednesday, January 14, 2009 at 5:47 am #

    I'd rather the government just start going after a fraction of the sales tax money they dismiss in Internet sales of cigars by certain well-known retailers. That would not only raise revenue for them to squander as they usually do, but it would also help level the competitive price playing field for B&Ms. And Jerry, if you've lived in DC all your life I can't believe you trust politicians to administer SCHIP any better than they do any other entitlement program they extract from the rest of us.

  27. Mitchell Hislop Wednesday, January 14, 2009 at 9:17 am #

    I run next generation cigars. That is one of the built in blogger templates. It is different than Stogie Guys, and when I finally get around to moving the blog onto my own domain with wordpress it will look totally different. I had that template before I even visited SG. It has been that template since I started the blog. Please dont assume that since two pages, who both use the same platform, look similar means someone stole from someone. I have chatted with the Stogie Guys about doing a post, and I am listed in their blogroll.

  28. Patrick S Wednesday, January 14, 2009 at 11:20 am #


    We started out publishing with blogspot using a slightly customized version of the same basic blogger template you use now. Over time it evolved more and more, and eventually we left blogger for wordpress and we ended up with our current look. However some similarities to that original still remain.

    That's the reason for any similarities (which as far as I can tell is really just the background).

    No worries.

  29. fyi guys Wednesday, January 14, 2009 at 2:10 pm #

    heads up- whomever runs stole your blogger template.

  30. Tito Wednesday, January 14, 2009 at 4:50 pm #

    The TARP legislation today/tomorrow is merely new restrictions on the use of the funds – the idea being to give certain Dems cover when they vote on the next $350 billion in the near future.

    As for SCHIP, as appalling as the tobacco tax part of the bill is, the budgetary gimmicks used to mask/cover the cost of the bill are even worse in their dishonesty in my opinion. The bill sets up the payments for the final authorized year of the program (FY2013) to make the budgetary baseline cost for FY2014 $6 billion, down from $17.4 billion in FY 2013 (a fictional 66% cut that will never happen) and requires the prepayment of a percentage of FY2014 corporate taxes in final quarter FY2013, creating a false pay-for that leaves a gap in FY2014 revenue that must be plugged at a later date.

  31. Michael J. McFadden Friday, January 16, 2009 at 5:27 pm #

    I realize this is a cigar site, and I'm quite grateful to the Stogie Guys for making the Jan. 13th version of this bill available, but I am APPALLED at the focus on and shrugging over the relatively minor (for now) tax increase on cigars while your fellow non-cigar smokers are practically being hauled off in boxcars. Don't you realize they WILL come back after you???

    Here's a note I've been posting around to some of the newspaper comment sites in various forms. I think it would do folks here quite well to read it too.


    This bill suffers from one major weakness: SCHIP will be mainly funded by a 200% tax increase on most smokers, but there's more to it than that. It also incorporates a truly MASSIVE tax increase on one of the poorest of the poor minority groups in the entire country, a group that's poorer on average than blacks, hispanics, senior citizens, or single mothers. I'm speaking of smokers who cannot afford to buy regular cigarettes but who are honest enough to avoid the black market by simply buying loose tobacco and rolling their own. – – – – –

    This minority group will be hit with a TWO THOUSAND PERCENT TAX INCREASE over the next few months if Obama signs the SCHIP bill: taxes on roll your own loose tobacco will go from just over a dollar a pound up to almost twenty-five dollars a pound. This tax increase will pour huge amounts of money into the black market, increasing law enforcement and prison spending, and send more money into supporting the next terrorist strike on America. – – – – –

    This bill should NOT be supported until the taxation to support it is shared among ALL Americans who love children… not just smokers.

    Michael J. McFadden

    Author of "Dissecting Antismokers' Brains"

  32. Mike Byelick Saturday, January 17, 2009 at 2:12 pm #

    The government is taxing their cash cow to death. You cant fund every project with tobacco. but somehow the government manages to do it.

  33. Bob Saturday, January 17, 2009 at 3:41 pm #

    successful B&M s shouldn't even think of “competing with” the mail-order houses.

  34. Bob Saturday, January 17, 2009 at 3:53 pm #

    The tax on RYO goes from $1.0969 per pound to $24.62 per pound (not a typo).

    That's just way too far! I don't like, or think that Cigars should be viewed in the same light as Cigarettes, but I believe in "Freedom Of Choice", and a tax increase of that magnitude clearly targets low-income people, quite unfairly.

    I believe that anyone, as an adult should have the right to choose to drink, or smoke without unfair taxation…

    The RYO tax is criminal, but the who;e SCHIP issue is really just the first "crack-in-the-dam"…This is just the way they did gun control: In INCREMENTS.

  35. Bob Saturday, January 17, 2009 at 8:29 pm #

    Comment #27 by John is a terrible attitude/stance: “Going after the ‘Big-Guys’ would mean more for me”.

    Now, John…

    Without the “Big Guys” many of the brands that “B&M” retailers profit from today would have never been developed, discovered or have gotten off of the ground: No Excalibur, Ashton, CAO, Cuba Aliados, Puros Indios ,Padron, Bauza, La Gloria Cubana, Rocky Patel or ALEC BRADLEY, just to name a few.

    I stopped doing business with my local tobacconist many years ago, way before all of the heavy taxation came on, because he was quite simply gouging the hell out of people, myself included, so I found a better one, a few miles away.

    Not all “B&M” shops are gougers; it’s quite the opposite: they’re institutions built on trust, and careful “one-on-one” customer service, that can can ONLY be found at the local “B&M”.

    The “B&M” serves, and has always served a unique role within the Cigar Industry: there has ‘always’ been mail order, but it’s off to the B&M for “that “Special Smoke” that I won’t pay for an entire box of, or for a new lighter,butane, Pipes, Pipe Tobacco, pipe cleaners a new humidor or a special gift for a friend or relative.

    For Example: I would only go to my favorite B&M to buy a new Pipe, because the owners know me, and can ‘customize’ informed suggestions to me, as to what would be a worthwhile purchase for me.
    They do this because they want me to keep coming back.

    The internet is new, but Mail-Order is anything but new. That which “John” thinks would “level the playing field”, might just be “Game-Over”- period…If the big “Certain Well-Known Vendors” start tanking… who are you going to get your cigars from, since a good many of these “Well-Known Vendors” are also wholesalers.

    Basically, I think that the B&M s have their unique place, and when entering into such a business, it’s good to “know your place”, and to use it to your advantage.

    The B&M offers a different kind of “specialty” service: this is called “niche-differentiation”, and successful B&M s should don’t even think of “competing with” the mail-order houses…

    The personalized service is the “Brick and Mortar’s” strength, and you can’t order that online.

  36. Michael J. McFadden Saturday, January 17, 2009 at 9:38 pm #

    Bob wrote, " AND the possibility of a cap of up to $3.00 going into place"

    I must confess that I'm not familiar with all the terminology being used here, but thinking in terms of anything using the phrase "up to" is simply not real. The SCHIP taxes are *highly* unlikely to bring in the projected income and with the additional expenses of fighting a black market and the impossibility of removing "health care for children" once it is locked in place and families have relinquished whatever private health insurance they may have had for their kids the government will be in *very* desperate need of more funds. They may turn to alcohol, but it's more likely they'll attack the remainder of the smoking market first. A $3 "cap" could very easily turn into something far different.

    There's a site that the Obama folks have set up as a "public ear" for commenting. Audrey Silk of NYC has led off with a strong Anti SCHIP comment there and I followed up on it in more depth than I've done here. If anyone here wants to try adding to it feel welcome, but take some time to write any entries carefully and substantively: CLASH has put out a fairly major press release on this and it's possible the posting will get some media attention: we want to put ourselves in the best light possible.

    ALSO: the sign in process is painless: even if you're not going to comment, sign in and add a vote for the comment (it actually counts as ten votes for some unknown reason… must be Democrats counting…. LOL!) and if you have a bit more time, type SCHIP into the search engine and do up or down votes on other SCHIP articles that have been left for Obama. Moving our concerns up on the voting ladder could make a difference.

    Michael J. McFadden

    Author of "Dissecting Antismokers' Brains"

    P.S. if anyone wants to contact me directly I'm Cantiloper over on the aol system. If my mailbox is full just try back in a few hours. 🙂

  37. Kilobyte Sunday, January 18, 2009 at 12:55 am #

    SCHIP expansion is the ground work for universal government health care. While some may like that scenario the reality is once this is in place the Fed can and will regulate all aspects of your life by regulating any act on your behalf the Fed deems hinders your health.

  38. Bob Sunday, January 18, 2009 at 1:38 am #

    Yes, once the Federal Government gets control of the healthcare system, we’re going to become “subjects”, and the Government will then assume the “authority” to regulate anything that may hinder your health, since they’re footing the bill for your healthcare… it’s called “SOCIALISM”, and it has no place in the U.S.

    People come from all over the world to take-advantage of our ‘ahem-“screwed up” healthcare system, when their own Country’s system (e.g.: Canada, U.K.) has a backlog that is simply staggering, and won’t afford them timely, or appropriate lifesaving treatments, due to an overtaxed, and highly bureaucratic system.

    As far as the Stogie Guys, and Lew Rothman, and this […] (?) creating a panic… I can’t really blame anyone for panicking, or rather taking preemptive action, in the face of a possible gargantuan floor-tax, AND the possibility of a cap of up to $3.00 going into place, especially when you’re sitting on some really expensive merchandise, that will never move once that happened.

  39. Jeff Sunday, January 18, 2009 at 1:33 pm #

    It's not too late to email your Senators and state your opinion on this matter. The reason our country is in the shape that it is in is that citizens are lazy!

    "Smoke 'em while you got 'em," "I'll get mad and do something when…," "we should count ourselves lucky that it is only 40 cents," etc. contributes to this complacency. What is wrong is doing nothing.

    If you support this bill, write your elected reps, if you don't write, email, get a bumper sticker, tell your friends, whatever. Just do SOMETHING!

    It is not wrong to get upset, it is not wrong to question those whom we elect, it is not wrong to peacefully state your opinion to those that can help affect a change.

    If you don't stand for something you will fall for anything.

  40. Jeff Sunday, January 18, 2009 at 1:35 pm #

    BTW, End the FED.

  41. Dale Saturday, January 24, 2009 at 8:05 am #

    We the government again can’t figure out a fair way to pay for this program we have created so we have decided to take the simple path buy taking away freedom from a select group of folks. This is the only way we can make money how could we possibly tax the good folks that don’t smoke only people that smoke are qualified to pay for this wonderful program every one else gets a free pass. We have a moral obligation to ensure uninsured children have coverage smokers are nasty people from hell and deserve to pay way more taxes than anyone else for there freedom of choice.

  42. Niki Lauda Monday, January 26, 2009 at 1:33 pm #

    How about a $5.00 a box tax on Oreo's and a $2.50 tax per big Mac! Overweight issues kill more than a real good Cigar. Leave the smoker alone and tax the junk food. Maybe when we fly next time there will not be someone overflowing onto you seat from theirs while eating a super size kit kat bar.

    Niki out…..

  43. Jeff Monday, January 26, 2009 at 6:49 pm #

    Amen to that one brother! I wrote exactly that to my state Senator…well, it went over about as well as a fart in a space helmet.

    But let’s keep trying on this one, squeaky wheels get the oil.

Trackbacks and Pingbacks

  1. Stogie Reviews: Gispert Natural Lonsdale - Wednesday, January 14, 2009

    […] SCHIP tax coverage? See here for the latest. Background information in these articles: 1, 2, 3, 4, 5, 6, […]

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    […] now there’s another reason not to hotlink. In the US, a law has just come into effect levying a new federal tax on cigars. Naturally, the anti-smoking lobbyists, Action on Smoking and Health (ASH) are very pleased. So […]

  3. Stogie Guys Friday Sampler CXXIV - Friday, January 16, 2009

    […] the House of Representatives voted 289-139 in favor of extending and expanding SCHIP. As we reported Tuesday, among the bill’s numerous tobacco tax increases is a 750 percent hike in the federal […]

  4. Buying Cigars Online | The Stogie Review - Sunday, January 18, 2009

    […] is that many of them have been the same. With the recent announcement of the SCHIP tax proposal (as reported by the Stogie Guys) and Lew Rothman, of JR Cigars, putting everyone in a panic with the latest catalog, it seems […]

  5. Stogie Guys Friday Sampler CXXV - Friday, January 23, 2009

    […] According to Cigar Rights of America the SCHIP tax increase will be slightly higher than originally reported. Read the press release here for […]

  6. Stogie News: Legislative Update, Rocky Patel on Cigar Taxes - Monday, January 26, 2009

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  7. Cigarette, cigar costs likely going up to pay for poor kids’ insurance | The Political Whore - Monday, January 26, 2009

    […] hit small cigar shops with millions of dollars in tax liabilities for their warehoused sticks, is out of this current bill: For most of you reading this, the heart of the issue is what happens with large cigars, the […]