Faced with a budget shortfall of nearly $3 billion, Massachusetts Governor Deval Patrick has proposed raising the excise tax on cigars to 110 percent, a move one tobacconist believes would bankrupt the state's cigar business.
According to administration officials, a $2 cigar that costs $2.76 now would jump to $4.46 if the new tax takes effect.
"It would essentially kill the [cigar] business," said Stephen Willett, owner of the L.J. Perreti tobacco shop in Boston, which has been in business since 1870.
The additional tobacco taxes, according to notes included in the budget, are needed to generate $15 million that will then be filtered back into the state-run health care system.
The governor's 2011 $28.2 billion budget proposal, unveiled last Wednesday, also includes a tax rate hike on chewing tobacco, soda, candy and pipe tobacco. The tax rate on pipe tobacco would jump to 120 percent.
As expected, the new tax proposals are being heavily criticized. According to reports, House Speaker Robert A. DeLeo, D-Winthrop, has already said that the House would rewrite the governor's budget so no new tax increases are included.
In addition, the Cigar Rights of America and the International Premium Cigar & Pipe Retailers Association have urged their members to take action and contact their local representatives.
For more on this story, please see the next Cigar Insider.