Proposed Cigar Tax Burns Pennsylvania Tobacconists

HARRISBURG, Pennsylvania -– Pennsylvania legislators and Governor Ed Rendell are heading for a showdown with more than 20 percent of the state’s adults who smoke and can vote by aiming to impose a 30 percent tax on cigars and tobacco products, other than cigarettes. The move would devastate retail tobacconists, cost tax revenue instead of raising it, and encourage illegal smuggling, according to the International Premium Cigar & Pipe Retailers Association.

Nearly 100 days into an impasse over the state’s budget, Pennsylvania’s Rules Committee last week made substantial departures from a deal made September 18. Among other changes, the revised proposal adds a 30 percent tax on cigars and smokeless tobacco in an attempt to help close the $3.2 billion tax gap.

“Outrageous!” said Chris McCalla, legislative director of the IPCPR. “These legislators are so desperate to raise tax revenues that they are not thinking clearly; they are grasping at straws and really haven’t thought this through.”

McCalla singled out Rep. Robert Belfanti, D-Northumberland, as an example. Belfanti is quoted by the media as having said, “We stood firm against big tobacco.”

“Obviously, Rep. Belfanti doesn’t know what he’s talking about. We are not ‘big tobacco.’  Premium cigars are made primarily by small, family-owned businesses that have been hand-crafting their products for generations. These premium cigars are then sold by smoke shop owners, largely mom-and-pop operators who employ local citizens, serve their neighbors, and pay federal, state and local sales and payroll taxes.

“The real losers, however, will be Pennsylvania’s discriminating cigar smokers at all economic levels who enjoy their premium cigars just as they might enjoy a single-malt scotch whiskey or a bottle of good wine,” he said.

More than 70 of IPCPR’s 2,000-plus members are located throughout the state of Pennsylvania.
 
“The governor goes around defending the so-called economic progress being made in the U.S. and now he’s supporting an action in his state that has the potential to completely destroy a segment of an industry that has been misunderstood and under siege, despite the facts,” McCalla said.

Heavily taxed tobacco products in other states have encouraged illegal smuggling, McCalla added.

“So, not only would such a tax on cigars potentially cause the loss of businesses, jobs and tax revenues, it would encourage illegal activities which force the state’s legal system to divert its attention from more important matters,” he said.

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For more information on tobacco legislation in your state, please visit www.ipcpr.org.