Warning: cigar lovers...

[panamag8or]

Cigarmakers in a panic

The federal tax on each cigar could rise from 5 cents to $10.

By JAMES THORNER
Published July 17, 2007
One of J.C. Newman's most popular brands is the Cuesta-Rey vintage cigar from the Dominican Republic.

In the shipping and packing department, Daniel Matos, 32, pulls cigar boxes off the shelves to fill orders at the J.C. Newman Cigar Co. in Ybor.
Business News Video

Eric Newman punches the numbers on his calculator and gapes at the results one more time.

It's no mathematical error: The federal government has proposed raising taxes on premium cigars, the kind Newman's family has been rolling for decades in Ybor City, by as much as 20,000 percent.

As part of an increase in tobacco taxes designed to pay for children's health insurance, the nickel-per-cigar tax that has ruled the industry could rise to as much as $10 per cigar.

"I'm not sure in the history of man, since our forefathers founded the country in 1776, that there's ever been a tax increase of 20,000 percent," said Newman, who runs the Tampa business founded by grandfather Julius Caesar Newman. "They had the Boston Tea Party for less than this."

When it comes to tobacco sales, cigars are just a speck compared to cigarettes. In 2006, the nearly 400-billion cigarettes sold domestically dwarfed the 5.3-billion cigars.

But cigars are intertwined with Tampa's lineage.

Though the local industry has shriveled from foreign competition and domestic consolidation, cigarmaking still employs more than 1,000 in Tampa. About 900 work at the factory, offices and warehouse of Hav-a-Tampa, owned by foreign tobacco giant Altadis.

Newman machine-makes 35,000 cigars a day at 16th Street and Columbus Avenue and imports hand-wrapped varieties from Latin America. He estimates Florida makes or imports 80 percent of the cigars consumed in the United States and predicts devastation if the new taxes are approved this summer.

Many casual smokers are well heeled enough to plunk down $10 for a premium puff. But would they pay $15 to $20 for the same pleasure?

"Why don't we just go out of business?" Newman said. "Here, you can run our company, Mr. Government."

Here's the source of the controversy: The Democrat controlled Congress has sought an extra $35-billion to $50-billion for the state children's health insurance program. The program distributes payments to the states to help buy coverage for kids not poor enough for Medicaid.

Cigarettes, which accounted for more than 95 percent of tobacco tax collections last year, are the main focus of the bill. Federal taxes on a pack would jump from 39 cents to $1.

But the legislation has dragged cigars along for the ride. The industry operates under a 4.8 cents-per-cigar tax cap.

Under the proposed bill, taxes on "large cigars," a category that includes all but the tiny cigars sold in 20 packs like cigarettes, would rise to 53 percent.

A U.S. Senate version of the bill under consideration today in the Finance Committee sets the maximum tax per cigar at $10.

"We are a very small industry. We're the fly. The cigarette industry is the elephant as far as tax collections are concerned," Newman said. "We've been roped in with conglomerates that own cigarette companies."

Newman's eyes and ears in Washington, Norm Sharp, president of the Cigar Association of America, was dumbfounded when the legislation went public Friday.

"I thought there was a typo. I thought they meant 10 cents per cigar, not $10 per cigar. I was stunned like everyone else," Sharp said.

Sharp's organization represents 66 members, including Newman, Altadis and Jacksonville's Swisher International, the global company that makes Swisher Sweets.

The association has lobbied to exclude cigars from the bill, but bristles at the public relations challenge: How do you oppose a sin tax Congress has rigged to help sick kids? Senate staffers couldn't be reached for comment.

In Newman's view other companies declined comment and left the talking to Sharp, it's not just unfair but also immoral to overtax a product enjoyed not by addicts but by worthy pleasure seekers. The average aficionado smokes about three cigars a week at about $3 to $5 apiece, according to the cigar association.

"A good wine. A good scotch. A good bourbon. A good cigar. It all enhances the quality of life," Newman said. "We're in the relaxation business."

The Bush administration may inadvertently come to the industry's aid. The president has vowed to veto the bill, not over the cigar provision but over objections to expanding federally financed health care for the non-indigent.

Several business in and around Ybor City, usually blind to the workings of Washington, will be craning their necks toward the capital.

"Things happen strangely in Washington," Newman said.

Get 'em while you can.

 

[RondoHatton]

Political Correctness - The (smoke-free) Kiss Of Death

A decade ago there were many wonderful little old cigar shops. One near where I was working in Santa Monica had terrazzo floors - who does terrazzo anymore? Then "Meathead" Rob Reiner's tobacco tax bill killed most of 'em off. As I recall it was, y'know, for the kids. And he claimed "...I dint know it'd tax cigars, too?!..." Just a few years ago there was a nice lounge in Toluca Lake/Burbank (a guy named Ceasar), very cozy, FL'ers mighta felt right at home in the club chairs, the former Money Tree bar next door, but, no, more local goody good taxes were levied on baaad baaad tobacco, and, like Magic! the bad cigar store went away...

There have been several boutique-esque attempts at renting the storefront, none lasting near as long as the cigar lounge, which is now vacant again.

Smoking BAAD! Smokers BAAAAD!!

 

[Dr. Shocker]

remember its all for the good of the kids whether you have em or not your gonna pay for em......this just chaps my hide 20,000% increase but because its smoking related most people will be ok with it........I am off to enjoy a drink and cigar and try to remember when the goverment wasn't trying to kill America

 

[jamespowers]

These people are nuts. All I know is that I won't pay a single cent either way.
I get mine from reservations. Tax free all the time.

Regards,

J

 

[Diamondback]

Don't let any tax-collectors see that, Mr. Powers...

(Guys have been busted for their brags on the Net before.)

 

[jamespowers]

Don't let any tax-collectors see that, Mr. Powers...

(Guys have been busted for their brags on the Net before.)

Perfectly legal as well. I love the Senneca Nation.

Regards,

J

 

[RedPop4]

I mentioned this on the new Out of the Humidor thread earlier today.

 

[Bruce Wayne]

hmm, might have to go out & buy a couple of boxes next week...

 

[LocktownDog]

Perfectly legal as well. I love the Senneca Nation.

Regards,

J

Same here. Surrounded by reservation land. Can't get my favored pipe tobaccos at the smokeshops there, but cigars are another matter altogether. I'm far less picky about them. Got a case of White Owls for my father (they're what he's been smoking for 40+ years) for a total of $16 last week.

Richard

 

[jamespowers]

Same here. Surrounded by reservation land. Can't get my favored pipe tobaccos at the smokeshops there, but cigars are another matter altogether. I'm far less picky about them. Got a case of White Owls for my father (they're what he's been smoking for 40+ years) for a total of $16 last week.

Richard

Exactly. Where can you get a better deal?
If you can't get it at your local reservation, you can always have it sent from another one. The shipping alone is less than the taxes they try to suck out of you. :rage:

Regards,

J

 

[Vintage Betty]

Well, that preposterious.

I was one of those people who went out and got signatures for that bill. I was one of the people who researched it, and joined the campaign for this taxation on cigarettes in order to support the Children's Health Initiative here in California, and no one ever spoke or wrote of something so ridiculous as this HUGE taxation on cigars.

It's incredibly disturbing how the volunteering that I spent four years on can be washed away so easily by an additive to the bill that I never saw in four years of working on this. :rage:

I don't smoke, but can guarantee you that I didn't spend hundreds of hours on this campaign for this taxation. Does this apply to ALL cigars? How do foreign imports fare?

My apologies to you.

Vintage Betty

 

[luvthatlulu]

Well, that preposterious.

I was one of those people who went out and got signatures for that bill. I was one of the people who researched it, and joined the campaign for this taxation on cigarettes in order to support the Children's Health Initiative here in California, and no one ever spoke or wrote of something so ridiculous as this HUGE taxation on cigars.

It's incredibly disturbing how the volunteering that I spent four years on can be washed away so easily by an additive to the bill that I never saw in four years of working on this. :rage:

I don't smoke, but can guarantee you that I didn't spend hundreds of hours on this campaign for this taxation. Does this apply to ALL cigars? How do foreign imports fare?

My apologies to you.

Vintage Betty

This is another classic example of otherwise well-intentioned people getting snookered by over-reaching zealots. And, unfortunately, apologizing now for going along is tantamount to "Sorry, I didn't know the gun was loaded."

We would all do well to remember that zealotry is the natural enemy of rational thought. And that standing by idly and unconcerned while someone else's rights or privileges are trampled on and revoked only encourages others to begin seeking the same fate for ours.

 

[RedPop4]

Betty, they knocked that cigar tax down to $3 maximum. But on many cigars, that's still a significant amount of money to pay.

The other insidious little thing they wanted to pass was to create an inventory tax. I lost a good friend in October, my own age (41) who owned a shop in St. Mary's Georgia (it was his dream when he relocated there from Katrina.) He was going to blow out all his cigars for pennies on the dollar and enter January 2008 with NO inventory.

They were going to require tobacconists to pay this tax as a lump sum on every cigar in stock. It would have bankrupted almost all tobacconists.

 

[Vintage Betty]

This is another classic example of otherwise well-intentioned people getting snookered by over-reaching zealots. And, unfortunately, apologizing now for going along is tantamount to "Sorry, I didn't know the gun was loaded."

We would all do well to remember that zealotry is the natural enemy of rational thought. And that standing by idly and unconcerned while someone else's rights or privileges are trampled on and revoked only encourages others to begin seeking the same fate for ours.

Apology withdrawn.

VB

 

[Dr. Shocker]

its hard to work on a project that may or may not end in doing right or going so far as to remove the rights of the citizens. I respect anyone who gets involved whether I agree or not at least you are doing something but I always suggest looking at who is running the project to see how far they are willing to go......

 

[Brad Bowers]

Thread Closed

This thread has gotten personal and nasty, something we don't allow here on the Lounge. Make nice and move along.

Brad