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Cigars Could Be Taxed Like Cigarettes

Big news in the industry right now is President Obama’s budget proposal which includes new tax increases that could affect the premium cigar business. Buried deep in the budget is the proposal to raise the federal cigarette tax by 94 cents a pack. The president’s budget not only proposes raising taxes on cigarettes, it plans on raising taxes on all types of tobacco products, including premium cigars.

While cigarettes go up 94 cents a pack, other tobacco products are planned to increase at the same rate. Cigars would increase about 37 cents in cost. If you were to purchase a box of 25 cigars, that’s an increase of over $9, that really adds up.

Cigar Association of America did a Q&A on why cigars should not be taxed like cigarettes and the information provided proved to be rather interesting. CAA simply states that cigars are not cigarettes and that no industry, including the cigar industry, should be singled out for taxing. According to the National Institutes of Health, “Most cigarette smokers smoke every day. In contrast, as many as three-quarters of cigar smokers smoke only occasionally, and some may smoke only a few cigars a year.”

A survey done by the National Survey on Drug Use and Health reported that the measure of current usage of cigars by underage youth declined significantly between 2004 and 2006. Then of course there is the actual law, something most people seem to forget when all of these issues are being tossed around. If the law isn’t being enforced or penalties are too lenient to deter underage youth from illegally smoking, then that should be the main focus, rather than target the entire tobacco industry and its adult consumers.

While we are informed on the issue and clearly know the difference between cigarettes and cigars, one thing is for sure, those of us in the cigar industry need to continue to keep policymakers informed.