Bobby and I attended the RTDA tradeshow in Houston, TX the weekend of August 5th and gained a perspective on what the cigar industry is bringing us this year. First, for those not familiar with the RTDA it stands for Retail Tobacco Dealers of America. During the meeting at Houston the board was decided to change the name to International Premium Cigar and Pipe Retailers Association. The reason for the change was simple and of two parts; one to make the manufacturers feel more at home especially the ones form Nicaragua, Honduras, and San Dominican, second to show the government that we are not and should not be associated with the cigarette and chewing tobacco industry which is all manufactured and processed by machines. Premium cigars are handmade and can take up to 300 or more hands to touch the leaves to make one cigar. It is more an art form than a commodity.
We attended a meeting on the reasoning behind this move due to the cigar tax initiative that passed through the House and Senate with amazing speed. Never in the history of the United States has such a tax been imposed on any item. Tax on a cigar federally is about 4.8 cents a cigar, this would increase 20,000% percent or 53% on the retail price of the cigar. That means a $7 cigar would now cost, $10.71, a $15 cigar would cost $22.95, and those who prefer a $30 cigar would pay $45.90. Didn't we have a tea party in the harbor of Boston for a whole lot less? The reasoning behind this tax is to fund a $35 to $50 billion tax funded state children's health program. The federal government would give the funds to the states to pay for health programs for the children not poor enough to be on Medicare. This is where the White House Administration has a problem with the bill and has vowed to veto the bill because of the expansion of federally financed health care for the indignant. Now all the cigar manufacturers made a bold statement and pronounce they are not against the bill in entirety or to help children. It is simply the amount of tax against the cigar industry that could wipe out premium hand rolled cigar manufacturers, retail, wholesale, and all industry that relies on this item that currently employee almost 1 billion people between the United States and the countries who manufacture hand rolled cigars such as Honduras, Nicaragua, and Dominican Republic. Let's look at a different perspective, cigarettes are currently taxed at about $.39 cents a pack, the new law will make them about a $1 dollar. This is about a 256% increase, compared to 20,000% for cigars. Almost 78% times the increase on cigars over cigarettes but cigarettes last year accounted for about 95% of the total tobacco tax at about 400 billion packs sold compared to 5.3 billion cigars sold in the US last year. That is roughly 75% more cigarette by the pack of 20 sold more than cigars. Now why do cigar manufacturers detest this bill? It seems it is almost immoral to tax a product that is mainly used as a pleasure item 75% more than an item that is an addicted use based item. And is they do this to cigars, what is next? How much is alcohol taxed? Remember this is the number one killer of all young adults and teens. Still $.05 cents a can of beer, which mind you has not even kept up with the price of inflation by almost 75%. The rights of the cigar smoker and manufacturer have been stomped on and to the point of extinguishing all cigars nationwide and the manufacture of to those who supply the US with these luxury items.
What can we do? Not much at this point as it has passed both the senate and the House. But we are told that because the White House has threatened to veto this bill that there are negotiations going on as this is written. We can call our senators, as there are only 100 of them versus about 435 in the House of Representatives so the odds are in the favor of the senators that we can make a stand. Call and ask for the staff manager and only speak to him. Tell him that you as a tax paying citizen your constitutional rights from the get go are being violated, as the preamble reads,
"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." And you want premium hand rolled cigars removed from the bill so as to maintain a level playing ground for all consumers and manufacturers. And they should negotiate with the White House with this removal for what the White House wants and then as a consumer and a American citizen you would be assured that your rights as a cigar consumer are protected, just like that of others that have indeed secured the Blessings of Liberty and established Justice, and insured domestic tranquility. Remember you are going to pay these taxes, not the parents of the children who will benefit from the tax.
At least if you may understand what this is about, never in history has such a tax burden been put on a consumer product in the western world, and never has the US Congress ever been so fast at passing a law. Almost like they knew it was the only way they could get it passed if it was rushed through so as the public does not really get a chance to speak through its electoral representatives.
Enjoy your smokes,