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Stogie News: Massive Cigar Tax Increase Hits Today

1 Apr 2009



The 700 percent excise tax increase on “large” cigars that Obama signed into law on February 4 goes into effect today. The tax is part of a series of increased tobacco taxes raised for the controversial State Children’s Health Insurance Program (SCHIP).

Under SCHIP, large cigars will be taxed at 52.75 percent, with a cap of 40.26 cents per cigar. This enormous increase, up from the previous rate of 20.719 percent with a cap of 4.875 cents per cigar, has many worried that it will devastate an industry already under siege due to state tax hikes and smoking bans.

Along with the tax on premium “large” cigars, the following tax increases will take effect on April 1:

  • -Cigarettes: $1 per pack (up from 39 cents)
  • -Small cigars: $50 per 1,000 (up from $1.80)
  • -Snuff: $1.51 per pound (up from 58.5 cents)
  • -Pipe tobacco: $2.831 per pound (up from $1. 097)
  • -Chewing tobacco: 50.3 cents per pound (up from 19.5 cents)
  • -Roll-your-own tobacco: $24.78 per pound (up from $1. 097)
  • -Cigarette wrappers: 1.2 cents per 50 (up from 1.2 cents)
  • -Cigarette tubes: 12.4 cents per 50 (up from 6.3 cents)

Despite the tax increases, studies show that millions of new smokers will be needed for the SCHIP hike to produce the revenue needed to meet funding requirements.

Industry Braces for Impact

While the exact affect on the industry remains to be seen, retailers and consumers are bracing for the negative impact of the massive tax increase.

In an interview earlier this year, CAO President Tim Ozgener told StogieGuys.com that the SCHIP tax increase had the potential to devastate not only cigar retailers, manufacturers, and consumers, but could also lead to widespread unemployment and crime in the Dominican Republic, Honduras, and Nicaragua—the three main sources of premium handmade cigars. He also told us that taxes, even more so than smoking bans, could devastate retailers since cigars are a “non-addictive luxury item,” which smokers could easily cut back on in response to higher prices.

Ultimately, the fear is that taxes could end the cigar industry as we know it. That’s why Rocky Patel of Rocky Patel Premium Cigars said, “I don’t worry about the competition. Every night I go to bed and I worry about the government putting us out of business.”

Is today the day that the government puts cigars out of business? Or will the industry take a hit but eventually weather this SCHIP storm? Only time will tell.

-Patrick S

photo credit: Stogie Guys

Drew Estate

34 Responses to “Stogie News: Massive Cigar Tax Increase Hits Today”

  1. dmjones Wednesday, April 1, 2009 at 3:32 am #

    Makes you long for the old days when "W" was President–at least he vetoed this bullcrap!

  2. CWS Wednesday, April 1, 2009 at 3:36 am #

    In support of my local shop, I am going to buy some cigars today.

  3. Mac and Nudo Wednesday, April 1, 2009 at 4:07 am #

    I'm just going to pretend this whole SCHIP thing is a big April Fool's joke…

    I'm with you, CWS. Probably hit a B&M on the way home from work. After all, it's for the children.

  4. CWS Wednesday, April 1, 2009 at 4:40 am #

    Mac and Nudo – you're right, it's for the kids . . . just trying to do my part as a responsible cigar smoker.

  5. Patrick M Wednesday, April 1, 2009 at 4:47 am #

    On top of the SCHIP my Florida legislature is talking of trying to add a $1/stick tax to cigars, along with other tobacco taxes, to try and balance the state budget. At the moment it sounds like the governor is against the cigar tax and undecided on the tobacco taxes. Hopefully the state legislature will realize the importance of the cigar industry in Florida before they tax them out of existence.

  6. dmjones Wednesday, April 1, 2009 at 5:10 am #

    In celebration of "SCHIP Day" make sure to tell a non-smoker that your habit is funding health care for "poor children" and then tell them "At this point, if you're not smoking, you must hate children. Why do you hate children?"

  7. Mizz Wednesday, April 1, 2009 at 7:08 am #

    Ya it's for the children. Unfortunately this also includes the millions of illegal immigrants as well. I couldn't go to ANY country in Mexico or Central/South America and get continual free health care for my children.

  8. KyBoy Wednesday, April 1, 2009 at 8:19 am #

    This really yanks my chain…They need to start taxing every fast food cheeseburger an extra $.50…that would generate much more money for the children and save ten times the number of lives that cigars take every year. The government is getting out of control. Oh wait, I got to go, I think Obama's looking over my shoulder right now….

  9. Jason Wednesday, April 1, 2009 at 8:28 am #

    What would our founding fathers do?

  10. Alex D Wednesday, April 1, 2009 at 8:41 am #

    What if this new tax would have quadrupled the price of ANY tobacco product? How insane would THAT be? Crazy, right?

    Well, that's the situation up here in Canada… If we had a $0.41 tax cap on large cigars, I'd be laughing all the way to the B&M and I would purchase 4 times more cigars than I do now (when I do)

    Just saying, you guys still have it good, despite this SCHIP tax. It could be a lot worse and as most here already said, it's for the children :)

  11. Anthony Wednesday, April 1, 2009 at 9:40 am #

    Well, I say, to hell with the children. Everything is for the children. I thought W was bad as a president, but this guy takes the cake. Hell, I hate to say it, but I miss GW already.

  12. dmjones Wednesday, April 1, 2009 at 9:43 am #

    Jason,

    Our founding fathers would take up their issue with the taxing authorities with a progression of actions: complain to the oppressing bodies, refuse to pay the tax, take up arms against the oppressors. I do hope it doesn't have to go that far to drive the extremists out of office, but…

    By the way, no one has brought up the question of what happens when the tobacco taxes fail to raise as much revenue as the taxers say it will? It's not a matter of if it will raise as much money, but one of "how short" will the shortfall be? Get ready, all you child-hating non-smokers out there, they're going to raise taxes on your sacred cow next!

    In the struggle to fund "children's" health care, I think that they should start by taxing diapers and Happy Meals! :)

  13. Mike Wednesday, April 1, 2009 at 9:55 am #

    Any tax hike will depress demand somewhat. But the cigar industry was lobbying for a tax no higher than $1 a stick.

    Comparted to say, the RYO industry, they're doing OK. And since premium cigars are an occasional purchase, I don't think the hike will have as big an impact as it will on cigarette smokers.

  14. GB Sunday, April 5, 2009 at 5:19 pm #

    Buying cigars is consenting to this tax.I have a few hundred cigars in stock, once they are gone thats it. As long as this disgusting tax is in place I will not buy any more.

  15. William Naegele Wednesday, April 8, 2009 at 11:01 am #

    As long as Americans suffer fascism, we will thus suffer…

  16. Margie Raymond Tuesday, April 14, 2009 at 9:38 am #

    This tax will put a lot of good people out of business.

    There will be a cigar tax protest in Tampa, today outside

    The Ihop on dale mabry at 4:30. Please show up and support

    The cause!

  17. andrew Friday, May 1, 2009 at 3:33 am #

    Ok stop your winging Americans ;)

    Here in Australia nearly 50% of the cost of every stick goes to tax… we have a blanket tobacco tax for dirty ciggerettes and fine cigars….

    you guys still have it good ;)

  18. Michael Thursday, July 16, 2009 at 9:30 am #

    will I have to pay per-cigar when I buy a box? or will they just tax them together?

  19. Richard Schulte Sunday, July 19, 2009 at 1:56 pm #

    The government and President “Obeyme” have taken over the auto companies, the banks, and the insurance companies, so why not the cigar business. A Democratic president can’t rest until he gets his hand into your wallet pocket and takes out every friggin’buck he can grab hold of. Even Kennedy bought a bunch of Cuban stogies before he signed the economic ban ending trade with Cuba.

  20. jack fox Monday, February 15, 2010 at 3:30 pm #

    found some charging 29.99 including tax same store?

  21. jack fox Monday, February 15, 2010 at 8:26 pm #

    the stupids at the stores put a fifty dollard per pack tax on small cigars. how do we get this changed? price was 17.00 a carton now 70.00

  22. Mike Monday, May 31, 2010 at 2:19 pm #

    In Canada all tobacco is subject to a 55% tax of it's WORTH, do you know how expensive that makes tobacco products here? I recently got into cigars but try to find ways for people to send me cigars privately online so I can avoid paying that ridiculous tax on a $200+ purchase. It's damn near criminal what they do to us and now Americans will be feeling what Canadians have been dealing with for over a decade.

  23. Ronald Friday, December 6, 2013 at 8:15 am #

    Cigar tobacco is natural… Cigarette tobacco is not… Now it is all about the teens that smoke cigars well if adults did not buy tjem they would not have them just like alcohol… Alcohol kiils lots itself but we hardly hear anything about that do we… Damm alcohol can even be a sponsor for things… Yet drunk drivers kill people besides people at bars get shot by drunks and people die from health problems from drinking to… Cigars are totally natural…. Damm just like weed doctors even give people weed these days you know why they are getting big bucks for it…. America is all about the money word… Natural or not it wants it money look at the price of gas even these days…. watch and see i bet there will be more drugs on the street i sure know since the price of cigarettes have gone gone the streets have more drugs these days… America is on its way to no where land

  24. YouTubeCigs Monday, September 15, 2014 at 9:00 am #

    Typical. Cigarette taxes are immoral!! L&M Cigarettes

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