Fight For Your Cigar
Posted: Jul 18, 2007 3:23pm ET
It’s time to pick up the phone and to fight for your right to have a cigar at a price you can afford. News broke this week—in Cigar Insider, on this website and throughout the cigar world—that the U.S. Senate is considering a bill that would significantly increase the price of the cigars you enjoy. The legislation would add $35 billion to the State Children’s Health Insurance Program, and the politicians who created this bill want those funds to come from tobacco users. And the burden that would be heaped on cigar smokers, especially those who smoke premium cigars, is completely out of hand.
Many people have erroneously described this tax as a $10 tax on cigars. What it calls for is increasing the current federal tax on cigars from 20.7 percent of the manufacturer’s selling price (more on that later) to 53.3 percent. That increase is bad enough, but what gives this increase such teeth is the fact that the current tax is capped at around 5 cents a cigar, while the new plan calls for a cap of $10 per cigar. Which essentially means there will be no cap.
The manufacturers selling price, depending on the company doing the selling and other factors, is roughly one half the suggested retail price of a cigar. This tax is added first, so this tax will exacerbate any local sales taxes and state tobacco taxes you pay on your cigars.
One cigarmaker told me this would double cigar prices. Another said it would be higher than that. On top of this consumer burden is a floor tax, where those holding stocks of cigars would be forced to pay a one-time tax to cover the gap between old and new tax, or 32.6 percent. Imagine you're a cigar distributor, and you have 100,000 cigars, worth an average of $5 each. You’ll have to write a check to the government for $163,000. Now imagine having 1 million cigars in inventory. That’s $1.6 million, gone in one night.
This is a serious threat to the U.S. cigar business.
It’s bad enough we’ve been pushed out of nearly every spot in the country to smoke our cigars, pushed out of restaurants, bars, casinos and clubs. It’s bad enough most of us smoke alone, huddled outside against the cold or while driving in our cars, the radio our only company. This latest attack can’t be allowed to pass without cigar smokers voicing their outrage.
I spoke to Norman Sharp, president of the Cigar Association of America, yesterday, and he said the best way to get your Senator’s attention is to call. Don’t write, don’t email, and don’t fax: Call. Call the Senators from your state. Let your voice be heard.
Will you call?
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