Tobacco Tax Could Sound Death Knell for PA Cigar Stores

It’s one thing to talk about a bill, but when you actually SEE it, it takes on a more ominous dimension. Earlier this week I was handed a copy of House Bill No.1476 (see “Related Links” below), otherwise referred to as the “Cigarette and Other Tobacco Products Tax Act.” I read proposal. It all looks a bit sinister, too, with its stark typewriter font and numbers running down along the left of each line. If passed, the bill would not only have a drastic negative impact on our business, but there are at least three other national cigar distributors/retailers in Pennsylvania that would be hurt by its passage, not to mention certain death for practically every local cigar store. Since the smoking bans at least allow you to smoke in a cigar store, this act would get you through the back door by virtually eliminating the stores, as well.

Under Section 2, titled “Definitions,” cigars come under the definition of “Tobacco product.”
“A product containing tobacco for consumption. The term includes a cigar, a little cigar, a cigarillo, pipe tobacco, smokeless tobacco, roll-your-own, smoking tobacco, bidis or beedies and kretek. The term does not include a cigarette.”

Further down in Section 3 titled, “Incidence and rate of tax on tobacco products” part (a) it states: “The tax is imposed on the tobacco product wholesale price, regardless of the actual price at which the tobacco product is sold and regardless of whether the tobacco product is sold.”

It gets better: In  Section 3 (b) which references requiring a tobacco stamp, not unlike those found on the bottom of a package of cigarettes. Here’s the rub: “The stamp shall be affixed to or impressed upon each package of tobacco product.” Can you imagine affixing a stamp to every single cigar sold in a cigar store?

And now for the knockout punch – Section 3 (c): Tax – “The tax imposed by this section shall be at the rate of 59.2% of the wholesale price of the tobacco product.” In case you didn’t have your glasses on, that’s FIFTY-NINE POINT TWO PERCENT.

In a Pittsburgh Tribune-Review story dated June 12 by Jerry Guo, titled, “Pa. tobacco tax not a sure thing this season,” Mr. Guo leads with, “In any other industry, a 60 percent increase in prices would bankrupt a business.”

According to one of my sources, the state legislature does not currently have the bill on its docket for a vote, even though they want to have a budget approved by June 30th. That’s some good news. Moreover, I don’t have any information at this time as to if and/or when the Cigar Association of America, the Washington, D.C-based lobby group will try to halt or at least get the bill modified with regard specifically to cigars. Maybe there’s still time.

Here are the names of the representatives who have introduced the Cigarette and Other Tobacco Products Tax Act: Frankel, Bennington, Curry, Freeman, Josephs, Leach, McGeehan, Melio, Mundy, Rubley, Thomas, and Walko.

Now that you’ve got the names, it’s even more crucial that you contact your representatives and tell them this bill is unfair to cigar smokers. Again, you can click here to find your representatives and do so.

The Pennsylvania Cigar Tax Hotline is also still open at 1-877-978-9993. If you haven’t done so already, call it today to speak to someone in your representative’s office, or leave a message. (Don’t count on speaking to them directly.)

What’s most frustrating is that cigar smokers – imported premium handmade cigar smokers, that is – make up such a small fragment of the population. Our voice is so small it’s akin to being a droplet of water in the ocean. Somehow, we must find a way to band together and get loud; show our representatives, many of whom are cigar smokers themselves, the distinction between cigars and cigarettes.

At this point all I can do is hope for the best, since my job and many others could be at stake. I also pray that at this year’s RTDA in Houston, this growing threat will be addressed and that some cogent plan can be agreed upon. £

Related Links
Pennsylvania House Bill No.1476
Pennsylvania cigar smokers must take action now!