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A $4 Cigar--Yours for $7

| By Marvin R. Shanken | From Orlando Hernandez, Mar/Apr 99

California's Proposition 10, a sweeping new regulation known as the Early Childhood Development Initiative, took effect on January 1, and it has turned the world of cigar tobacconists in California upside down. Cigars were hit with a huge tax increase, the tariff soaring from 26 percent of the wholesale cost to 62 percent. Another increase takes effect on July 1, raising the total tax to 73.5 percent. Depending on how much tobacconists pass on to their customers, cigar prices may rise by as much as 70 percent. A cigar that cost $4 on December 31 may now cost almost $7.

Some tobacconists are closing stores, such as Kerrie Aley, the owner of Romeo et Juliette in Newport Beach, who shut down her Seal Beach store. Others, like Ed Grant of Grant's Pipe Shop in San Francisco, are waiting to see if they can afford to stay in business. But many retailers are already laying off workers and cutting inventories.

What do you call a state regulation that forces layoffs, closes small businesses and raises the price of a product beyond the reach of normal consumers? It's simple: it is de facto prohibition dressed up as a tax.

So how did this happen?

Proposition 10 resulted from a high-profile, and well-financed, campaign led by actor and director Rob Reiner, who pitched the program as a way to fund social programs to assist young children. The public was told that the measure was a 50-cent-a-pack tax increase on cigarettes. It was hard for opponents of the bill to attack the concept of a noble program to help kids at the expense of "evil" cigarette companies. But hidden in the Prop. 10 wording, and not mentioned in the extensive television and billboard advertising, were the clauses that taxed all tobacco products at the same rate and imposed the so-called "floor tax," which required retailers to pay a tax on the value of existing tobacco inventory on their shelves on January 1. That last clause meant a tax bill of between $50,000 and $60,000 for the average tobacconist! Many retailers had fire sales in December rather than face that tax burden.

Despite the $6.3 million spent promoting the Reiner initiative, it passed by less than one percentage point; the vote was so close that the outcome was in doubt for more than a week after the election.

The message here is clear: cigar lovers across the country need to be especially vigilant during the next few years. Initiatives in California have a way of spreading. But they can be defeated.

The ongoing effort by the antitobacco forces to lump cigars in with all other tobacco products is just wrong. Cigars are an adult pleasure, enjoyed by most people in moderation. It is not a product that draws anything more than idle curiosity from kids. Why should cigar smokers, who understand the risks and rewards of their adult pastime, pay the price because cigarettes sometimes get into children's hands? They shouldn't. Cigar retailers and manufacturers have demonstrated for years that their business practices are not aimed at underage smokers, and they continue to behave responsibly.

This craziness must be stopped. Passing an initiative such as Prop. 10 is like carpet-bombing a city to wipe out a single target. There's no reason that cigars should be included in antitobacco measures. That they are is clear evidence that the goal of these antitobacco initiatives is not simply to raise money for the greater good with a so-called "sin" tax. The ultimate goal is to stamp out all tobacco use.

But it won't work. The momentum can be stopped. Everyone in America who cares about their freedom, and their right to choose, whether it's smoking a cigar or sipping a glass of Bourbon, should wake up. The onslaught to restrict our choices, led by people who fervently believe that they know what's best for you, is under way. Tobacco is just the beginning.

Marvin R. Shanken
Editor & Publisher

Gordon Mott
Managing Editor