The Stogie Guys

When he was running for president in 2008, Senator Obama promised not to raise “any taxes” on families making less than $250,000. Fifteen days after being sworn into office, he broke that pledge by signing the SCHIP bill that included a major increase in federal tobacco taxes.

Now, five years into his presidency, Obama (himself a longtime cigarette smoker) has proposed raising taxes further. His proposed budget for fiscal year 2015 includes a 94% increase in tobacco taxes.

For cigarettes, the federal rate would jump from $1.01 to $1.95 per pack, up from 39 cents per pack in 2008. The new excise tax rates would then be increased annually to account for inflation. The rate on cigars, which is a percentage of sales as opposed to a per-unit tax, would increase proportionally, presumably with the tax cap jumping from 40 cents per cigar to upwards of 75 cents.

According to an IPCPR statement, in FY2015 the proposed tax hike is estimated to raise $78.217 million over 10 years, which the budget says would be used to fund pre-K education.

Analysis

Fortunately, this budget has pretty much zero chance of passing in its current form. As the IPCPR notes in its statement, “IPCPR does not expect this proposal to be approved by the Republican-controlled House of Representatives, but it does demonstrate that the entire suite of tobacco products is going to be on the table when legislators are searching for revenue to fund unrelated programs.”

And that is exactly the key takeaway. President Obama has repeatedly promised that tax hikes wouldn’t impact anyone not in the highest income percentiles. But, like so many areas, there’s an unwritten asterisk when it comes to tobacco.

Tobacco taxes disproportionately impact lower income income Americans, and that doesn’t include the lower income people in other countries who would lose their jobs as consumption is reduced by the high prices of increasingly climbing taxes. Yet, even a president who says he only wants to target the wealthiest Americans with higher taxes feels free to target those with lower incomes if they smoke.

Ultimately, the key point is that cigar smokers (and other tobacco users) need to make it clear to their elected officials that they are taxed enough already. If something (whether it be pre-K education or anything else) is worth paying more taxes for, then they should seek to pay for it out of taxes that impact everyone, not taxes targeted at a minority that already pays more their than their fare share.

–Patrick S

photo credit: Lisa Jack

President Obama’s budget may be two months late, but cigar smokers may be wishing it was even later. The president’s budget, announced Wednesday, proposes nearly doubling taxes on all types of tobacco products.

The budget includes a 94-cent-per-pack increase in the cigarette tax and would index the tax rate to inflation so it automatically increases over time. A pack of cigarettes is already taxed $1.01. Rates for “other tobacco products”—a federal designation that includes cigars—would increase by the same proportion.

In 2009, as one of his first moves in office, Obama signed into law the State Children’s Health Insurance Program (SCHIP) tobacco tax increase, which raised cigarette taxes from 39 cents to $1.04 and raised the cap on cigars from 5 cents to 40 cents. SCHIP was the largest single tobacco tax increase in history, but the new Obama budget would top it.

The result would be that most cigars would increase 37 cents in cost. For a box of 25 cigars, that’s an increase of over $9.  Some less expensive cigars would increase less, but the percentage tax increase could actually be larger.

Fortunately for cigar smokers, most political observers consider the proposed budget dead on arrival in Congress. Still, the budget is a starting point for negotiations, and more importantly stands as a value statement for the president, who says the tobacco tax revenues would go towards early education spending.

Critics noted that the taxes would hurt small businesses and eliminate jobs. “For specialty tobacco stores that sell primarily tobacco and tobacco-related products, a sales decline greater than what occurred in 2009 to 2010 would be destructive to their businesses and result in store closures and employees losing their jobs,” observed Tom Briant, executive director of the National Association of Tobacco Outlets.

In addition, analysts note that not only will the tax increase be passed on to smokers, but over time retailers and manufacturers may end up marking up the increase along with the rest of the wholesale price, resulting in even higher price increases for consumers. Under that scenario, the price of a box of premium cigars could increase by almost $20.

–Patrick S

photo credit: Stogie Guys

Tomorrow, millions of Americans will head to the polls to decide which politicians will make the laws that, for better or worse, we will live under in the coming years. While there are many reasons to vote and many issues to consider, we hope you’ll keep your cigar rights in mind when you decide who to support.

Unfortunately, enjoying a cigar is under attack from legislation and regulation at all levels of government. Who is elected tomorrow could well make the difference when it comes to which cigars we enjoy, and where we are free to enjoy them in the future.

When it comes to presidential candidates, the stances of the major candidates on cigars comes down to a known and an unknown. One of President Obama’s first acts in office was signing into law the largest tax increase on cigars in American history. Not long later he signed into law the bill to regulate tobacco under the FDA, which includes authorization for the FDA to regulate cigars without any further act from Congress, a bill which could in the long run be far more damaging to the cigar industry and the choices cigar smokers have. When cigar smokers petitioned the White House for an official answer about its plans to regulate cigars under the FDA, their calls were answered with a deafening silence.

Obama’s Republican opponent, Mitt Romney, doesn’t have much of a record on theses issues. But considering Obama’s positions and that Romney has been attacked for his criticisms of SCHIP (the tax hike on cigars that Obama signed into law), it’s hard to think he could be much worse. If you’re having trouble pulling the lever for either major party candidate, you also might consider Libertarian candidate Gary Johnson, former Governor of New Mexico, whose philosophical beliefs make him the most likely to keep government’s hands off cigars, even if he has zero chance of getting elected.

But while most of the attention is likely to be paid to the top of the ticket, the races further down the ticket are more likely to have an impact on cigar rights in the years to come. After all, it is Congress that makes the laws, and only Congress has the power to fully repeal the FDA’s authority to regulate cigars.

When it comes to House and Senate races, Cigar Rights of America has a voter guide that every cigar smoker should take a look at before heading to the polls. In a few races, like the Florida and Nevada Senate races, both candidates are co-sponsors of the bill to stop the FDA from regulating (and devastating) the cigar industry. In most races, only one candidate is on record in favor of cigar rights. (In a few races, like Arizona Senate candidate Jeff Flake vs. former Surgeon General Richard Carmona, CRA has gone out of its way to endorse the pro-cigar candidate. In that race, it’s Flake.)

When it comes to local and state races, you’ll need to do your own investigations. But please take the time to do so, since when it comes to smoking bans and state tax rates, these local races make all the difference. And, of course, know if there are referendums on your ballot that would increase taxes or smoking bans.

Ultimately, we’re not going to tell you how to vote because we think you’re smart enough to make that decision for yourself. Just remember that the decisions you make in the voting booth have consequences, and the future of cigar rights (smoking bans, taxes, and anti-cigar regulations) could depend on who is elected tomorrow.

–The Stogie Guys

photo credit: N/A

In this segment of Random Thoughts from the Humidor, I pontificate on the upcoming football season, Lance Armstrong, and observe the latest from Puro PAC.

Football and Cigars

Baseball is still my favorite sport to watch with a cigar (the pace of the game and the long season is perfect for relaxing with a cigar), but football is a close second. Finding a cigar shop with your game on television is a goldmine, while watching the Sunday night game (which streams for free online) isn’t bad either on a crisp fall night on my balcony. My favorite Super Bowl viewing experience was at Shelly’s Backroom, although that had more to do with the fact that my Giants beat the undefeated Patriots that year.

Lance the Dope(r)

Following years of allegations that Lance Armstrong cheated his way to his historic victories in the Tour de France, the U.S. Anti-Doping Association has stripped him of all seven of his Tour de France titles. Lance claims the government agency lacks the power to do this and claims it is all a political attack against him, but has dropped all his legal challenges to the agency’s actions. Meanwhile, Armstrong continues to push for the government to control the lives of adults who choose to use tobacco and relentlessly attacks those who oppose his efforts. Does he see the irony (or hypocrisy) of complaining when the government supposedly overreaches against him for putting a foreign substance in his body, while at the same time pushing the government to interfere even more into the lives of millions of others who choose a different (and legal) substance? I doubt it.

Puro PAC Supports Cigar Bill Co-Sponsors (And Some Who Aren’t)

Puro PAC, the “Super PAC” created to fight for Cigar Rights in Washington, has been busy raising money and supporting candidates (so far the PAC hasn’t reported any independent expenditures). According to the most recent reports, all of the money is going to incumbents (though recipient Shelly Berkley (D-NV), a cosponsor of H.R. 1639, is currently challenging Republican Dean Heller for his Senate seat). Roughly two-thirds of the money has gone to Republicans. Of the 46 recipients of Puro PAC contributions, all but seven are co-sponsors of either the Senate or House versions of the Traditional Cigar Manufacturing and Small Business Preservation Act. Those who aren’t include Speaker John Boehner, Senate Minority Leader Mitch McConnell, Senator Robert Menendez of New Jersey (who apparently raises money at cigar events but also voted for FDA regulation of tobacco to begin with and led the charge to raise the SCHIP tax), and non-cosponsoring Representatives Leonard Boswell (D-IA), Yvette Clarke (D-NY), and noted cigar smoker Gerry Connolly (D-VA).

–Patrick S

photo credit: Stogie Guys

As we have since July 2006, each Friday we’ll post a mixed bag of quick cigar news and other items of interest. Below is our latest Friday Sampler.

1) Despite global economic turmoil and a reduction in cigarette consumption, cigar smoking increased significantly in the last decade, according to a recent report from the Centers for Disease Control. Between 2000 and 2011, “large cigar” consumption rose 233% (and pipe smoking increased 482%), compared to a 27.5% reduction among all tobacco products over the same time period. This rise in cigar smoking came against major headwinds like drastic increases in federal tobacco taxes (remember SCHIP?) and the further spread of smoking bans. Expect anti-tobacco zealots to use this report as justification for even higher taxes and dangerous regulatory measures from the FDA.

2) Woodford Reserve is celebrating 200 years of bourbon distilling with a series of events at its distillery in Versailles, Kentucky. Included are tours, picnics, an “1812 Bourbon Feast” with dishes from surrounding farms, and a special 200th anniversary bottle. Click here to check out the events.

3) Cigar Giveaway Result: We have a winner in our latest Stogie Guys contest. We selected Chris from Illinois at random from about 100 entrants, all of which we appreciate. Chris is a fan of Nicaraguan cigars whose favorite brands are Tatuaje and Liga Privada. He says he’s been smoking cigars for six years and is a newcomer to StogieGuys.com. He’ll receive the special three-pack of cigars from Don Pepin Garcia in a signed box. Again, congrats Chris.

4) Upcoming Cigar Gievaway: Macanudo is holding the Ultimate Round Contest to give one winner and three friends a trip to the 2013 Masters, including round-trip airfare and spending money (and we bet plenty of cigars). In that spirit, they’ve given us a golf-themed prize (a Callaway golf towel, club head cover, and a box of Macanudos) to giveaway to a reader. To be eligible to win, you need to be subscribed to our free email newsletter. We’ll announce the winner in an upcoming newsletter. (Fine print here.)

5) Deal of the Week: Lovers of large ring gauge cigars (and even those who normally prefer smaller ring gauges) may want to try the new Inch by E.P. Carrillo. Emerson’s is one of the first to have them in stock, and if you’re not sure if you’re ready for a whole box, check out the four-cigar sampler that includes both the Maduro and Sumatra blends.

–The Stogie Guys

photo credit: Flickr

StogieGuys.com has confirmed that General Cigar, Altadis, Oliva, and Davidoff have told retailers that prices will be going up on many (though not necessarily all) of their cigars.

Altadis price increases ranged from 2.5% to 5%. Altadis USA  makes Montecristo, H. Upmann, Romeo y Julieta, Trinidad, Siglo, Te-Amo, and many other well-known brands. Retailers also have been notified that Davidoff—maker of Davidoff, Winston Churchill, Camacho, Avo, and other lines—is also increasing prices.

General Cigar/STG, the largest producer of premium handmade cigars for import into the United States, raised prices around 3% earlier this week. However, the company’s CAO lines—only recently integrated into the company (details here)—were not included in the price hike. The CAO Cameroon and CAO Maduro cigar prices are decreasing, while the prices of other large cigars sold under the CAO name remain unchanged. According to the company, the increases were implemented “to offset the rising cost of tobacco, manufacturing, and logistics.”

Tobacconists we spoke with didn’t think the price hikes were unexpected. One shop owner felt that many companies had paused normal price increases immediately after the SCHIP tax went into effect to ease the burden on retailers, making the new hike understandable.

Another cigar shop owner was supportive of the increased prices “as long as these companies start committing the necessary financial resources to protect the premium cigar industry from being regulated and taxed out of business by the government.”  General Cigar, Davidoff, Altadis, and Oliva are all listed as “friends of CRA” on the Cigar Rights of America website. [Disclosure: StogieGuys.com is listed as a “CRA Partner” on the same page.]

The practical impact of a 5% increase is that a cigar previously sold to the shop wholesale for $3 would now be $3.15, generally resulting in an increase of the retail price from $6 to $6.30. Time will tell whether consumers are willing to absorb the increase without changing their purchasing habits, or if they respond by purchasing less expensive cigars and/or decreasing the frequency of their cigar purchases.

[UPDATE: Originally this article noted a report on another site that Alec Bradley VP of Sales George Sosa said the company was planning a future price increase of an undetermined amount.  That story has since been pulled on the basis that Alec Bradley withdrew confirmation.]

–Patrick S

photo credit: Stogie Guys

I have a lot of respect for Tabacalera Perdomo. When politicians raised federal taxes on “large” cigars by 700% for SCHIP, the folks at Perdomo responded by dropping their prices and absorbing the tax hike on most of their portfolio.

“We’re all in this together in these tough economic times,” said Nick Perdomo, the company’s president. “You should be able to afford great cigars at great price points.” So, in 2009 and 2010, Tabacalera Perdomo made many of their best-selling brands more affordable. Today, Perdomo creations are, generally speaking, a great value given the quality of the tobacco and the fine craftsmanship.

The Habano Corojo Robusto (5 x 52) is no exception. One of seven sizes in the line (which is also available in Maduro and Connecticut varieties), this smoke retails for $4 to $6 apiece. It comes adorned with ornate double bands, the larger of which honors the three different growing regions of Nicaragua: Estelí, Condeda, and Jalapa. This is, of course, a nod to the fact that the cigar is comprised of Cuban-seed tobacco from each of these regions.

The Robusto has a matte exterior leaf with several light-colored veins. Consistently firm from head to foot, the cap is applied nicely and it clips easily to yield a moderate draw. The pre-light notes are potent and reminiscent of earth, caramel, and peanut.

Once lit, the cigar has a medium-bodied flavor of spice, oak, and a tart taste on the finish. A gentle sweetness is also present that contributes balance. The overall effect isn’t terribly complex, but it’s satisfying and straightforward.

Don’t expect too many changes in flavor along the way, but you can count on the physical properties to be excellent. All three samples I smoked for this review displayed straight burn lines and solid ashes. The draw is tighter than most other 52-ring gauge cigars, but not to the extent that it causes smoking difficulties.

While I don’t foresee seasoned cigar veterans being blown away by the Habano Corojo Robusto, you can’t deny the value this Nick Perdomo creation brings to the table. I always seem to have at least a handful of these in my humidor to fill the need for a solid everyday smoke. That’s ultimately why this Perdomo earns three and a half stogies out of five.

[To read more StogieGuys.com cigar reviews, please click here.]

–Patrick A

photo credit: Stogie Guys