Take action now or pay $10 more for your cigar later

Yesterday afternoon, my email box was inundated with messages from cigar manufacturers about a proposed tobacco tax increase now in the U.S. Senate Finance Committee. Read the following letter from the Cigar Association of America (CAA) which explains the situation in detail, and you'll know why. If you thought smoking bans were the bane of cigar smokers, you ain't seen nothin' yet.

TO: CAA Member Companies
FROM: Norman Sharp, President
July, 17, 2007

Your help is urgently needed! The proposed taxes in the current Senate Finance Committee proposal to fund expansion of the State Children’s Health Insurance Program (SCHIP) solely through higher tobacco taxes will have a draconian impact on the cigar industry. Indeed, it is the biggest threat to the industry since President Clinton’s proposal in the early 1990s to fund universal health care on the back of the tobacco industry.

Under the current proposal, the large cigar tax rate would increase 156.4% (from 20.719% to 53.13% of the manufacturer’s selling price) and the current tax cap of around $0.05 per cigar would increase an astounding 20,413% to $10 per cigar – essentially making the cap irrelevant. All large cigars would effectively be taxed at 53.13% of the manufacturer’s selling price. In all of the Internal Revenue Code, no other product is subject to an excise tax that approaches this level. The little cigar tax would increase 2,635% -- from $1.83 per 1,000 to $50 per 1,000. To compound the injury, a floor stocks tax would be assessed on all products in inventory.

The Finance Committee is scheduled to mark up the measure tonight. We anticipate no changes being made in the revenue provisions. The full Senate is expected to consider the legislation next week, but possibly sooner. We need you to act now and immediately contact your U.S. Senators as well as Senators in those states in which you may have a plant, distribution facility, or sales personnel. Attached is a list of Senators along with their FAX numbers and, where indicated, their email addresses. If your Senator has both a FAX and an email address, then send both a FAX and an email. To assist you in drafting your communications, attached is a document we are using for lobbying purposes.

When you contact your senators, tell them that you strongly oppose the punitive cigar taxes proposed in the SCHIP legislation and tell them how they will impact your business. Those companies with overseas plants should have their plant managers make contact with the appropriate government officials and ask that they immediately get their embassies in the U.S. involved because these tax increases pose a dire threat to the tens of thousands of workers employed in the cigar industry in those countries.

We are also asking the mail order firms to email their customers to urge that they phone the office of their U.S. Senators. If you have an email list of your customers and choose to contact them on this issue, attached is a listing of the Senators’ phone numbers. A consumer should only contact his own Senators because Senators are most responsive to their own constituents.
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No one wants to see children deprived of good health care, but this proposal is way over the top. Certainly, there must be some other way to expand the program without putting thousands of good people out of business.

Here are two ways in which YOU can help stop this fund expansion from going through as it is now written:

Click this link, which will take you the legislation issues alert page at RTDA.org. You'll see a red, white & blue flashing image that says "ALERT - CONTACT CONGRESS NOW!"

Above that, to the right, enter your zip code and click the "GO!" button. That will take you to a page showing President Bush's name and your two Senators, and a quick and easy email letter. Simply follow the instructions to complete the email and click the "Send Message" button.

Or, to contact your Senators directly, you can also see the contact list of all U.S. Senators with their telephone numbers and email addresses.

Remember, your influence counts.


kermada said…
So, when are you going to start the fire sale to reduce inventory levels?

Or, when are you moving off shore?

With the ongoing legislation against tobacco, you just know this is going to pass. I can live without cigars, but the rollers can't live without jobs.


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