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Stogie Commentary: Obama’s Tobacco Tax Job Killer

28 Jan 2010

Last night, during his State of the Union address, President Obama spent a fair amount of time speaking about how to restore American jobs. He even touted various “targeted” tax cuts that he signed into law.

obamaSOTUObama said in his speech that he would visit Tampa, Florida, to have a townhall on the issue today. I can think of no better place for such an event. Tampa, after all, has been ground zero for the devastation caused by the SCHIP tobacco tax increase.

In a decision that Altadis USA directly attributed to the SCHIP tobacco tax hike, the Hav-A-Tampa factory, which began producing cigars in 1902, made its last cigar and closed its doors in July of last year. The move left around 500 employees without jobs.

One of Obama’s first acts in office was to sign the SCHIP tax hike into law. That bill increased the tax on small cigars to $50 per 1,000 (up from $1.80) and increased the tax on “large” handmade cigars a whopping 750%—from 5 cents to 40 cents per cigar.

Such a massive new tax burden has a real impact, and the 500 jobs lost at the Hav-A-Tampa factory near the site of Obama’s appearance tomorrow are just the most visible example of the many thousands of jobs eliminated by the tax on tobacco users, a group that already pays more than their fair share of taxes.

So today, instead of heading to a sports arena to hold a meeting with politicians and well-connected activists, Obama might want to visit the now-empty Hav-A-Tampa cigar factory and talk to the 500 workers who lost their jobs because of the tax increase on tobacco the president so proudly signed into law.

Patrick S

photo credit: Telegraph

Drew Estate

14 Responses to “Stogie Commentary: Obama’s Tobacco Tax Job Killer”

  1. Jeff Thursday, January 28, 2010 at 4:17 am #

    Nice commentary. I guess Obama thought everyone would keep buying tobacco. Apparently the CDC didn't tell him that raising excise taxes causes a decrease in consumption.

  2. Bob Thursday, January 28, 2010 at 5:15 am #

    Altadis just used SCHIP as a scapegoat to divert attention from the fact they were laying off all of those Americans so they could pay their rollers $7 a week instead of $7 an hour. Don't get me wrong, SCHIP sucks but so do most of the cigars that factory was producing. I suspect more were used to make blunts than were actually smoked.

  3. Bob Thursday, January 28, 2010 at 5:48 am #

    Don't get me wrong, Patrick. I am not a supporter of SCHIP, nor do I feel that such a drastic increase in tax rates was really fair. I just think it's a bit naive to place all of the blame on SCHIP while placing Altadis on a pedestal. $50/1000 is only a nickel per cigar. I don't see how an extra 5 cents is going to have that drastic of an affect on how many phillies blunts are being sold. An extra dollar per pack for cigarillos, maybe. I think the far larger enemy of the cigar industry is the anti-smoking laws sweeping the country at the state and local levels.

  4. furious Thursday, January 28, 2010 at 6:26 am #

    This entire thread speaks to a larger problem; that is, the ills of cigarette smoking having been transposed to cigar smoking over the last decade, principally by the media and liberal elite.

    It is not good economic policy to increase a discrete tax that disproportionately affects an under-represented minority.

    How much would you like to wager that the SCHIP funds will ultimately be reallocated to fund some assanine federal government study?

  5. Manny Thursday, January 28, 2010 at 8:04 am #

    Who smokes most of the tobacco sold in the US?

    LOWER to MIDDLE INCOME class. Guess what Obama, the last thing they need is additional taxes

    now they can't afford tobacco. Looks like we are headed into an oppressive society. Why stop there why not ban more freedoms?

  6. cj Thursday, January 28, 2010 at 10:15 am #

    I can't believe Obama blows wind about jobs in this country, and nary a mention about manufacturing. I have two young boys, and EVERY toy I buy is made in China. The incentive should be that American companies employ a U.S. workforce to make better products than Chinese junk. I don't know where the incentive would come from, but sooner or later there won't be any American anything for our "leaders" to sell to a foreign buyer..will we still be called the United States at that point?

  7. Patrick Thursday, January 28, 2010 at 10:29 am #

    Bob-
    Maybe they were looking to close the factory anyway and send the jobs overseas, but SCHIP certainly makes the decision for them. I mean the tax on machine made cigars increased 30x!

  8. Marc E Thursday, January 28, 2010 at 11:15 am #

    How is it that I agree with Patrick, Bob and Obama…odd.

  9. mighty Thursday, January 28, 2010 at 12:39 pm #

    There is the inevitable reality that if they continue to raise taxes on tobacco, that some will stop smoking altogether. So, a cycle will begin where the gov’t is used to this money coming in, then people stop smoking because it is just too expensive, and in turn the money for the gov’t begins to decrease.

    I’ve already personally spoken to a few people that have quit smoking cigarettes entirely because $5-6 dollars a pack (in Or) was just too much.

    Also, if tobacco products become too expensive, a black market WILL appear to sell goods that the gov’t isn’t receiving ANY money off of. Many countries in Europe already have already experienced this.

  10. Anthony Ferreira Thursday, January 28, 2010 at 3:26 pm #

    Nice Posts ! Although, I never thought your site would be used as a political forum. There are many similarities with politics and the cigar industry. What other businesses can you be wrong 40-70 percent of the time and retain your position? Well, maybe meteorology.
    I have a like-hate relationship with all of the above for longer than I can remember. I have often referred to them as the Big Flim-Flam. The SCHIP tax has made us tape an aspirin to our disdain and keep moving foward. What’s next–prohibition?
    Some of us do not care to be treated like children considering all the dung heaps we’ve had to cover for the greater good. We were afforded the opportunity to try several cigar blends, but like most adventures, the journey is more inspirational than the end result.
    Many a fortune was attained and squandered by the diversion of a few cents here and there. Honor, integrity and valor can’t be bought no matter how many gazillions you pay.
    As far as the comment concerning the Hav-A-Tampa factory producing sub standard product. The first cigar I ever smoked was a Hav-A-Tampa nugget with my grandfather. No, it was not the best, but I enjoyed those times more than times spent smoking over-priced crappers with so-called captains of industry.
    Here is another thought you won’t like– Do you guys think Altadis will sue the New Orleans Saints for the use of the fleur-de-lis posted on the Saint’s helmets and jerseys?
    Best Regards,
    Anthony Ferreira

  11. dj Thursday, January 28, 2010 at 4:35 pm #

    They came for the ciggies, they came for the stogies, now Congressional hypocrites are coming after the pipe ‘baccy!

    H.R. 4439, the Tobacco Tax Parity Act of 2010 was introduced on January 13, 2010 and would raise the tax on pipe tobacco 775%, from $2.8311 to $24.78 per pound (in an attempt to thwart the pesky and apparently innumerable and nefarious roll-your-own cigarette smokers who, under the burden of SCHIP, have resorted to rolling pipe tobacco into their sticks).

    PCism gone wild. “Freedom’s just another word.”

  12. BubbaGene Saturday, January 30, 2010 at 9:16 am #

    C'mon folks. As with the health care bill, you are just not smart enough to understand SCHIP. Obama will tell you that himself.

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