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 New Taxes on Pipes and Cigars

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Dutch

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Age : 52
Location : On the road.......
Registration date : 2010-11-06

PostSubject: New Taxes on Pipes and Cigars   Thu Apr 11, 2013 1:59 am

April 8, 2013 By Jacob Grier


According to Bloomberg, President Obama will be proposing new tobacco taxes to fund pre-kindergarten programs:


Obama’s 2014 budget proposal, to be released April 10, would finance a pre-kindergarten program for 4-year-olds with higher taxes on cigarettes and other tobacco products. The president outlined the program in his annual State of the Union speech to Congress. He’s seeking to increase spending in areas such as education while Republican lawmakers are pushing for additional budget cuts as a way to reduce the federal deficit.

White House spokesman Jay Carney declined to elaborate on the proposed tobacco-tax increase. “Wait for specifics,” he told reporters at a briefing yesterday.

Never mind for now that cigarette smokers already suffered a more than doubling of the federal tax in Obama’s first year in office. The “other tobacco products” part of this proposal is reason to worry for those who enjoy pipes and cigars.

The 2009 tobacco tax increases to fund the Children’s Health Insurance Program created some significant disparities among similar products. Pipe tobacco was taxed at a far lower rate than roll-your-own (RYO). Large cigars sometimes get much more favorable treatment than small cigars. As a result, producers and consumers shifted to pipe tobacco instead of RYO and added just enough weight to small cigars to qualify as large. The distorting effects of these taxes were immediate and striking:



These changes are almost entirely a matter of legal classification. Actual consumption patterns haven’t changed in the way the chart suggests. Neither pipes nor premium cigars have enjoyed an explosion of new consumers as a result of these taxes.

Nonetheless, the government wants to fix this disparity. A report from the General Accounting Office, the source of the chart above (PDF), estimates that in the first two years of new taxes these substitution effects may have cost the treasury up to $1.1 billion.

One way to fix the disparity would be to lower taxes on RYO and small cigars, but that’s not going to happen. So don’t be at all surprised if the proposal from the Obama Administration includes tax hikes on pipe tobacco and large cigars, imposing substantial new costs on consumers and retailers.

For more, read Michael Siegel’s take on the tax proposal. And for a longer explanation of how smoking bans, higher taxes, and FDA regulation threaten the premium cigar industry, see my December article in The Atlantic.

Update 4/10/13: Via International Premium Cigar and Pipe Retailers on Facebook, this is apparently the language in the budget proposal:


Increase tobacco taxes and index for inflation

Under current law, cigarettes are taxed at a rate of $50.33 per 1,000 cigarettes. This is equivalent to just under $1.01 per pack, or approximately $22.88 per pound of tobacco. Taxes on other tobacco products range from $0.5033 per pound for chewing tobacco to $24.78 per pound of roll your-own tobacco.

The Administration proposes to increase the tax on cigarettes to $97.65 per 1,000 cigarettes, or about $1.95 per pack, increase all other tobacco taxes by about the same proportion, and index the taxes for inflation after 2014. The Administration also proposes to clarify that roll-your-own tobacco includes any processed tobacco that is removed for delivery to anyone other than a manufacturer of tobacco products or exporter. The rate increases would be effective for articles held for sale or removed after December 31, 2013.

As predicted, all loose tobacco would be treated equally, resulting in a huge tax increase for pipe smokers. Details on cigars are lacking, but it looks they would be hit too.


http://www.jacobgrier.com/blog/archives/5997.html
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Greyson

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Age : 36
Location : England
Registration date : 2012-08-03

PostSubject: Re: New Taxes on Pipes and Cigars   Thu Apr 11, 2013 5:12 am

Even if I were not in the pipe smoking camp, taxing a relatively small special interest group which is already under tax pressure in order to pay for something unrelated seems like a very strange move. From my point of view it looks a lot like a way to take tax from those who can afford it the least (the majority hit are cigarette smokers with an actual addiction correct?) and get away with it because smoking is unpopular in the public eye.
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alfredo_buscatti

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Age : 62
Location : Piedmont, North Carolina
Registration date : 2007-12-17

PostSubject: Re: New Taxes on Pipes and Cigars   Thu Apr 11, 2013 8:34 am

It looks more and more like taxes are going up, especially as funding is needed for a government program proposed by the president.
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bosun1

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Location : fly over country
Registration date : 2012-10-23

PostSubject: Re: New Taxes on Pipes and Cigars   Thu Apr 11, 2013 10:55 am

Greyson wrote:
Even if I were not in the pipe smoking camp, taxing a relatively small special interest group which is already under tax pressure in order to pay for something unrelated seems like a very strange move. From my point of view it looks a lot like a way to take tax from those who can afford it the least (the majority hit are cigarette smokers with an actual addiction correct?) and get away with it because smoking is unpopular in the public eye.

Robin Hood stole from the rich because they had the money in quantity. It takes a government to steal from the poor because you have to 'harvest' from so many people..
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KevinM



Age : 74
Location : Connecticut
Registration date : 2012-02-26

PostSubject: Re: New Taxes on Pipes and Cigars   Thu Apr 11, 2013 1:19 pm

This "fix a disparity" nonsense combined with the "save the children" blarney combined with a traveling Greek chorus has become the Left's default tactic for creating USA High School.
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bosun1

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Location : fly over country
Registration date : 2012-10-23

PostSubject: Re: New Taxes on Pipes and Cigars   Thu Apr 11, 2013 2:59 pm

Left, Right, Dem, Republican it don't matter. I don't think too many of them have the country's interest at heart.
And a faithful follower of Brother John Birch!
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Slide



Age : 55
Location : Benton, Louisiana
Registration date : 2011-11-23

PostSubject: Re: New Taxes on Pipes and Cigars   Thu Apr 11, 2013 3:38 pm

alfredo_buscatti wrote:
It looks more and more like taxes are going up, especially as funding is needed for a government program proposed by the president.

Real smart funding a program with a revenue from a source you allegedly don't want people to enjoy.
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Aristokles



Location : Pittsburgh, PA
Registration date : 2010-10-02

PostSubject: Re: New Taxes on Pipes and Cigars   Fri Apr 12, 2013 11:31 am

bosun1 wrote:
Greyson wrote:
Even if I were not in the pipe smoking camp, taxing a relatively small special interest group which is already under tax pressure in order to pay for something unrelated seems like a very strange move. From my point of view it looks a lot like a way to take tax from those who can afford it the least (the majority hit are cigarette smokers with an actual addiction correct?) and get away with it because smoking is unpopular in the public eye.

Robin Hood stole from the rich because they had the money in quantity. It takes a government to steal from the poor because you have to 'harvest' from so many people..

Only a slight aside: Robin Hood stole from the government (sheriff) and gave it back to the poor blokes who paid it.
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