Nebraska Tobacco Tax Increase Proposal Harmful, Says Cigar Shop Association

Lincoln, Nebraska  March 31, 2011 – A 225 percent increase in Nebraska excise taxes on certain tobacco products would be harmful to businesses throughout the state, according to the International Premium Cigar & Pipe Retailers Association.

Legislative Bill 436 calls for higher cigarette and smokeless tobacco tax increases and an increase in the excise tax on other tobacco products including all cigars. The bill would raise taxes from 20 percent to 65 percent of the wholesale price.

“Tax increases of this magnitude backfire in this or any other economy. They never produce what they are expected to produce and they always lead to damaged businesses, lost jobs and lower tax revenues overall,” said Christ McCalla, legislative director of the IPCPR.

In addition, higher taxes on tobacco products inevitably lead to lost revenues to the state’s cigar stores because customers either purchase less or they migrate to the Internet and purchase their products online where they are not taxed, McCalla pointed out. He also cited that higher prices lead to contraband product, brought in illegally and sold without generating state tax revenues.

“Nobody wins when that happens,” he said.

Earlier this year, the results of a poll of 500 Nebraskans were touted by anti-smoking forces as justification for tobacco tax increases statewide. At that time, the IPCPR branded the poll as ‘phony.’

The poll was paid for by the Robert Wood Johnson Foundation, an $8.4 billion organization that gets its funds from Johnson & Johnson which makes the leading brand of anti-smoking medication.    

“The conclusions drawn from the poll results are phony for many reasons,” said Chris McCalla, legislative director of the IPCPR. “First of all, the poll’s funding source has a vested interest in forcing people to give up the pleasure of smoking which will result from higher tobacco taxes,” said Chris McCalla, legislative director of the IPCPR.  “Second, they are saying that 365 people should dictate higher taxes on those tobacco products by the citizens of Nebraska. Ridiculous!”

The IPCPR is an association of independent cigar store owners and manufacturers, most of whom are small, mom-and-pop tobacconists who primarily sell premium cigars, pipes and tobacco.

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Oregon Considers Controversial Tobacco Tax Increases

Salem, Oregon  March 30, 2011– A flurry of tobacco tax bills with conflicting objectives is under consideration by Oregon state legislators who should say ‘no’ to any new taxes, according to the International Premium Cigar & Pipe Retailers Association.

Oregon currently taxes cigarettes at the rate of $1.18 per pack. One of the bills being considered would hike the tax by an additional $1. One of the bills also contains tax increases on other tobacco products.  For example, HB 2110 proposes to increase the excise tax on other tobacco products from 65% to 120.25% of the wholesale price, while retaining the present cigar tax cap of 50 cents.

“While the cigar tax cap remains, this increase would prove detrimental to the sale of pipe tobacco and other tobacco products.  Even the current 65 percent tax is a tremendous challenge to retail tobacconists in the state,” said Chris McCalla, legislative director of the IPCPR. “If their goal is to raise additional tax revenues, they need to keep the rates reasonable or sales will plummet.”

HB 2385 would allow counties to impose their own excise tax on tobacco products.

McCalla said, “To potentially impose taxes on taxes on taxes would be beyond the endurance of any business owner, any consumer, any constituent in the state of Oregon or anywhere.”

Some supporters of a cigarette tax increase are said to be more interested in curbing smoking than raising additional funds, according to a report by the Association for Convenience and Fuel Retailing. The report also cited one of their former members who claimed the previous tobacco tax increase contributed significantly to the closure of his stores and layoffs of his employees.

“Premium cigars and pipe tobacco are unique tobacco products that are considered more of a hobby than a habit.  If they are overtaxed, consumers will obtain them through illegal sources such as bootlegging or the Internet. Either way, the state loses revenues, retailers lose business and jobs and businesses are at stake,” McCalla pointed out.

McCalla urged Oregon voters to contact their state legislators asking them to vote against any tobacco tax increases or any legislation that would extend taxability of tobacco products beyond the state level.

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Hawaii Faces Fight Over Tobacco Tax Increase Proposal

Honolulu, Hawaii  March 29, 2011– A controversial proposal to increase certain tobacco taxes in Hawaii is running headlong against individual constituent interests, says the International Premium Cigar and Pipe Retailers Association.

Hawaii House Bill 273 proposes to change the excise tax on all tobacco products, other than cigarettes, from 70 percent of the wholesale price to $3.20 for each article or item of tobacco product, other than a large cigar.  A minimum tax rate of $3.20 is proposed per package of five cigars, adjusted accordingly for packages of less than or more than five and provided that no cigar with a wholesale price less than $1 shall be sold in packages of fewer than five.

“This convoluted bill is as confusing as the rationale behind it,” said Chris McCalla, legislative director of the IPCPR.  “It has been proven in other states that increased taxes on tobacco products results in lower sales of those products and, consequently, lower tax revenues from those products.”

McCalla added that higher taxes on tobacco products also results in lost jobs and damaged businesses.

“When sales plummet, salespeople are let go and, eventually, businesses fail,” McCalla said. “These are not times when we can sacrifice jobs, income and taxes instead of doing whatever we can to create new jobs, stimulate revenues and support small businesses.”

McCalla explained that those customers who remain after the tax increases go into effect likely will resort to out-of-state mail-order or bootlegged cigars. 

“The result will be a significant loss of sales and excise tax revenues to the state, job losses and the closing of businesses across the state.  Is this what Hawaii needs today?”  McCalla asked.

“Government should not be taxing out of business those businesses that have every right to exist.  What other businesses and products have survived after absorbing such exorbitant tax increases? None. There are better ways to prevent children from using non-cigarette tobacco products, ways that don’t end up destroying jobs, families and communities,” said McCalla.

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Smoking Ban Will Only Hurt Lagging State Economy

INDIANAPOLIS, Indiana  March 28, 2011– A statewide smoking ban with key exemptions has passed the Indiana House and now awaits action in the Senate.  The International Premium Cigar & Pipe Retailers Association is urging its members and their cigar loving customers to ensure that the exemptions stay in place.

Indiana House Bill 1018 exempts casinos and horse racing establishments, retail tobacco shops and bars that only admit customers over the age of 21. The exemptions include nursing homes and fraternal clubs.

Chris McCalla, legislative director of the IPCPR, cited the economic downsides of a smoking ban and that the current exemptions would help mitigate them to the benefit of the state. According to the nonpartisan Legislative Services Agency, banning smoking in casinos and horse racing tracks could cost the state about $190 million a year. 

“If a smoking ban in gambling establishments could negatively impact their business, it could also hurt other adult-oriented businesses, like bars. And the pleasures of smoking shouldn’t be denied to veterans and other members of fraternal clubs as well as those Indiana constituents in nursing homes,” he said.

Lost business means lost jobs and lost tax revenues, McCalla pointed out.

“Even the Federal Reserve Bank, using data from the Bureau of Labor Statistics, has officially noted the negative business and jobs impact that such bans have on local and statewide economies,” said McCalla.

McCalla explained that legislated smoking bans are not only unnecessary, they attack the personal rights of smokers and non-smokers, alike.  It is the right of every business owner to declare their businesses smoke-free or not, he added.

“It is not up to government to make that decision,” declared McCalla, “and customers can decide for themselves if they want to patronize a place that does or does not allow smoking on the premises.  I think people are getting fed up with government telling them what they can and cannot do,” McCalla said.

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Illinois Considers Ease of Statewide Smoking Restrictions

Springfield, Illinois March 29, 2011 – When an across-the-board smoking ban prevents cigar enthusiasts from smoking in a cigar bar or a cigar store, what’s the next logical move? Exempt them, says the International Premium Cigar & Pipe Retailers Association.

The Illinois House Bill 1310 would give the state’s local liquor commissions power to issue smoking licenses to establishments with liquor licenses and other businesses that qualify – e.g. cigar bars and cigar stores.

“Now here’s a piece of tobacco-related legislation that is good for the state, good for business, and good for the economy, in general,” said Chris McCalla, legislative director for the IPCPR. “The smoking ban effectively obliterated cigar bars from the state. This legislation would allow for their welcomed return.”

The bill requires that prominent postings be made in the licensed establishments advising its employees and customers that smoking was permitted on the premises.

“The IPCPR – a non-profit organization comprised of some 2,000 local cigar store retailers and manufacturers of premium cigars – has long opposed legislated smoking bans while endorsing the right of business owners to decide for themselves whether or not to allow smoking in their respective businesses. In a way, HB1310 returns that right to at least some business owners,” McCalla said.

The bill was initially sponsored by Representatives Anthony DeLuca and Randy Ramey. Additional sponsors include Representatives Daniel Burke, Robert Rita, and Rita Mayfield.

“The state of Illinois is in a leadership position on this issue as it joins several other states currently preparing to revise their respective smoking bans to allow issuance of licenses by their local liquor commissions which would permit smoking in such establishments,” he said.

McCalla said the IPCPR is urging all of its members, their customers and all other adult residents of Illinois to contact their state legislators and urge their support for HB 1310.

“It’s the smart thing to do,” said McCalla. “It’s good for business, good for jobs and good for the state.“
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