David Savona

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Fight For Your Cigar

Posted: 03:23 PM ET, July 18, 2007

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?

(15 comments on this post) Submit your comments >

Reader Comments

User Name: Jose Blanco Posted: 04:37 PM ET, July 18, 2007

I do not know what has happen to this country, I guess any thing can happen ,what is going to be next,will they tell us who can we have sex with, and at what time who knows,I think we have enough problems all around to come up with this stupid tax,how are a lot of countries that already have problems going to survive if they can not grow tabacco,to be honest I think they do not care,lets get on the phones call up the meat heads in Washington and fight in out like O.K. Corral

User Name: michael albo, califonia Posted: 02:44 PM ET, July 19, 2007

I dont beleive this will ever happen. With Arnold as the govenor who smokes cigars at the capitol it would never be approved in this state.

User Name: KEN NEUMANN neumann, Libertyville,Il Posted: 03:47 PM ET, July 19, 2007

Thank you for bringing this to everyone's attention. We all need to pick up the phone and voice our opposition to this unbelievable tax. This is the most serious thing to ever to face the tobacco industry. We as retailers are not big tobacco, we are mostly locally owned and operated Mom & Pop stores. I am a tobacconist and very proud of it. Our industry is like that old story of the sleeping lion being poked by guy with a stick. We as the lion need to roar back and voice our opposition.

User Name: alan adamski, Casselberry, Fl Posted: 09:46 PM ET, July 19, 2007

I called both Senators form Florida and the President's Office..... Staffers were polite and took my comments. Phone numbers are easily accessed thru the RTDA website..... Phone calls get the most attention and only take a couple of minutes of time.... Act now before it is to late. Alan

User Name: Jose Blanco Posted: 10:13 AM ET, July 20, 2007

Ken as a good tabacconist you are doing your duty, I hope others would let there voice be heard,take care.

User Name: DAVE Savona Posted: 10:35 AM ET, July 20, 2007

Adam you're correct: phone calls do get the most attention. I've made my calls, and I'm glad to hear others are joining. Ken, I'm glad to hear the pride in your post. Also, you can access the phone numbers of any Senator in the link in my blog.

User Name: Nelson Boronat, Miami,FL Posted: 11:23 AM ET, July 20, 2007

It has been written that the President will veto this bill if it passes.

User Name: Dion Giolito, Reno Posted: 09:28 PM ET, July 20, 2007

CA has just as much to lose as the vendor/retailers do. Higher prices, out of hand taxes means less advertizing revenues, a tighter budget and quite possibly, heavy cut-backs through layoffs and god forbid, NO CA!

User Name: Manny Iriarte, Miami, FL Posted: 10:18 PM ET, July 21, 2007

My name is Manny Iriarte...I'm a photographer in the cigar industry. I truly enjoy smoking cigars, but thats not the point. I think that this country is prepared to get money for childrens health insurance from many other places rather than having to raise taxes/prices on cigars. You don't need to be blind to see that there is much more money wasted on ther things that are less important. Childrens health insurance is essential and vital and it should have been dealt with and resolved a long time ago. Thank You.

User Name: Dave Wagner, PA Posted: 10:47 PM ET, July 21, 2007

Dave, Thanks for posting this. I've made my calls and I'm urging others to follow your advice. Even (as stated above) if the president veto's this, it's imperative that our Senators know there are people (and voters) paying close attention to taxes on the cigar industry. The anti-tobacco voice is all some politicians hear. They should know about the rest of us too.

User Name: Matthew Caruso, Jersey Posted: 05:00 PM ET, July 23, 2007

I made calls and sent emails. Thanks for getting the word out, Dave.

User Name: Matthew Caruso, Jersey Posted: 05:37 PM ET, July 23, 2007

What sickens me most about this tax is that it is a veiled attempt to tax the "wealthy" as payback for the tax cuts given to the upper class during this administration. Who does this tax really hurt though? Small business. They might as well institute the champagne tax, the fur coat tax and the golf tax while they are at it.

User Name: DAVE Savona, New York Posted: 09:34 AM ET, July 24, 2007

Thanks Matthew and Dave for making the calls.

User Name: DAVE Savona, New York Posted: 09:40 AM ET, July 24, 2007

Manny, I also believe in the ultimate goals of the Children's Health Care Initiative. Who wouldn't want to make certain that all children receive health insurance? That's not my point at all. I'm against funding such a program on the back of the cigar industry. Why should cigar smokers be forced to bear the brunt of the financial burden? This bill could close down family businesses that have been around for generations. During my research for the stories I've filed on this subject, someone said a very intelligent thing: why on earth would the government want to fund such an important program with taxes on a declining (cigarette) industry?

User Name: Manny Iriarte, Miami, FL Posted: 09:31 PM ET, July 24, 2007

Dave, This afternoon I faxed several forms signing against this bill. Your absolutely right... The government is using the cigar industry as an excuse to use that money for childrens health insurance. Ironically... They know that eventually there won't be enough funds to cover the insurances becuase they obviously know that the cigar industry is going to decline. They just want to use it so that in the future they can cover their behinds and say that they "did what they could" to try and cover childrens health insurance policies. Its not about going after the cigar industry... Its simply an esay way for them to get money and at least say they attempted to help with the insurance. They don't care about the future of the cigar industry nor the family businesses. They really don't care about anything at all... Its just they need to temporarily do something about the situation and put it to the side like they do with everything else. Its a great pleasure to discuss this matter with you. Thanks.

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