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| RHODE ISLAND HOUSE HOLDS THE LINE |
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Page 1 of 2  Plus: A $500 cigar?!?Los Angeles, June 9 – Cigar lovers in and around Rhode Island got some good news this week when the state’s House of Representatives passed a bill that makes the state’s 50-cent tax cap on cigars permanent. The bill now goes to the State Senate for a vote, but a similar bill has been introduced there. The original tax cap was passed in 2006, when the state increased the tax on cigars from 30 percent to 40 percent of the manufacturer’s wholesale price. Fearing that smokers would simply stop buying cigars locally and head for nearby states or the Internet, a 50-cent cap was agreed to, but was set to expire later this year. The cap was specifically aimed at cigars which cost more than $1.25 each at wholesale to benefit smokeshops rather than impact the prices charged for machine-made, mass-market cigars sold in convenience stores and gas stations. That price requirement was maintained in the new legislation. Naturally, the bill was opposed by anti-tobacco forces, but Rep. Patrick Shanley, Jr. (D-South Kingstown) sponsored it because of the vastly different nature of smoking between cigarette and machine-made cigar smokers and those who enjoy premium cigars. Shanley reported that annual tax revenues from cigar and other non-cigarette tobacco sales in Rhode Island have remained steady at about $2.36 million since the cap was introduced, after dropping slightly from $2.50 million before the new tax (and cap) were imposed in 2006. Despite arguments to the contrary by the anti-tobacco forces, the 50-cent cap is one of the most effective measures that state legislatures can take to maintain or increase tax collections from in-state cigar retailers. As retailer after retailer will tell you, while buyers of individual cigars may not be stopped by raises in the price of single cigars, sales of cigars by the box are enormously impacted by taxes. “Your box business essentially disappears,” is the common refrain. Rhode Island is one of five states with 50-cent cigar-tax caps; the others are Delaware, Oregon, Washington and Wisconsin. According to a list in the latest issue of Cigar Magazine, Florida, New Hampshire and Pennsylvania do not impose any cigar taxes at all and four other states – Alabama, Arizona, Oklahoma and Texas – have flat-tax rates per cigar of 22 cents or less! How about a $500 cigar!? “I like to equate it to a perfectly preserved, classic sports car,” said Four Seasons Resort Scottsdale food and beverage manager Bill Ellis. “Except you light it on fire.” Ellis was describing to a reporter from the East Valley Tribune the resort small cache of pre-Castro, 1956 Partagas cigars, which sell for $500 each, accompanied by two glasses of vintage Cognac. |
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Did you know?
“Bauza is not only a premium Dominican brand, but still made in Cuba for domestic consumption only.
