HARRISBURG - For another year, at least, cigar smokers can puff away tax-free.
In the state budget deal signed Wednesday by Gov. Wolf, they escaped the fate of cigarette smokers, who will have to cough up an extra $1 tax a pack. Users of snuff and chew or loose tobacco will pay 55 cents more an ounce. The price of switching to vapor products and electronic cigarettes will include a new 40 percent wholesale tax.
Just about everybody with a nicotine habit will be helping narrow the gap between money coming into state coffers and money going out - everybody but stogie lovers.
Cigars will remain tax-free because they are the mainstay of a thriving industry in Pennsylvania. Legislators say they want to keep it that way.
"You have an industry that has been built here because of Pennsylvania's treatment of cigars," said State Sen. Pat Browne (R., Lehigh), chairman of the Appropriations Committee, "and that is the wholesale distribution of cigars. If you decide to move against that, you are essentially destroying a partnership that will encourage that business to vacate, to leave. And they would go to Florida."
Florida and Pennsylvania are the only states that do not tax cigars of either the premium or the gas-station variety. New Hampshire exempts only premium types from taxes.
Browne estimated that the cigar industry in Pennsylvania provides more than 1,000 jobs.
In King of Prussia, John Middleton Co., a subsidiary of Altria, manufactures popular machine-made cigars such as Black & Milds, as well as pipe tobacco. In Lancaster County, John Hay Cigars has made hand-rolled premium cigars from leaves grown in Pennsylvania since 1882.
There are also Holt's Cigar Co. in Philadelphia, creator of the Ashton brand; Cigars International in the Bethlehem area; and the Famous Smoke Shop in Easton, an online cigar store.
Altria's website boasts that its Black & Mild brand is "the second-largest selling large machine-made cigar in the U.S."
Legislators say those numbers translate into jobs for Pennsylvania residents. Altria employs about 480 Pennsylvanians, "more than 400" of them at the Middleton plant in Montgomery County, according to a company spokesman. Cigars International has more than 250 employees, according to its website.
"We certainly didn't want to jeopardize the folks that work in that industry," said Rep. Bill Adolph (R., Delaware), chairman of the House Appropriations Committee. "The cigar industry is kind of homegrown, and we would like to keep it here."
The revenue that would be generated from taxing cigars - by Browne's estimate, $28 million annually - is "relatively modest" compared with job losses should companies vacate.
That explanation doesn't pass muster with Eric Epstein.
"The industry is not going anywhere," said Epstein, coordinator of rockthecapital.com, a political watchdog site.
Other states with large tobacco industries tax cigars, he said. That Pennsylvania does not is the result of "a very aggressive and well-financed lobbying campaign," Epstein said.
Tobacco interests drop big money in Harrisburg. Since 2014, Altria has spent more than $1.8 million on lobbying. In that same period, 34 lobbyists from four firms have promoted their clients' interests in the Capitol.
In 2015, Altria, which also manufactures top cigarette and chewing tobacco brands, spent just shy of $1 million on political contributions and related expenses, according to the Department of State, which oversees elections and campaign finance reports.
Keep Jobs in the USA, a cigar-affiliated political action committee, has received contributions from Cigars International, Famous, and Holt's executives, among others, and reported spending more than $100,000 since 2014 on political contributions and other expenses.
Ron Kaufman owns a vape shop in Willow Grove. He called the new 40 percent tax on vapor and e-cigarette products a "business crusher" that will most likely lead to the demise of his and others' small businesses. He pointed out that cigars contain tobacco while vaporizers do not, and that the latter sometimes help customers end their tobacco use.
"A lot of what they're doing is patently illogical," Kaufman said. But "cigars have been around for a long time; vaping is new."
Some in the Capitol have privately grumbled that cigars were spared in part because many legislators like to smoke them, conjuring up images of cigar-chomping politicians doing themselves a favor.
As explanations go, Steve Miskin, spokesman for the House Republicans, doesn't think much of that one.
"Honestly, if that were the case, chew would have still been exempt, because a number of members chew," he said.
The presence of the tobacco industry and its lobbyists in the Capitol, he said, definitely influenced the exemption of cigars in the revenue package.
"When you do have a manufacturing base, large employers," he said, "members listen."
shawcolt95@gmail.com
@coltshaw_
In the state budget deal signed Wednesday by Gov. Wolf, they escaped the fate of cigarette smokers, who will have to cough up an extra $1 tax a pack. Users of snuff and chew or loose tobacco will pay 55 cents more an ounce. The price of switching to vapor products and electronic cigarettes will include a new 40 percent wholesale tax.
Just about everybody with a nicotine habit will be helping narrow the gap between money coming into state coffers and money going out - everybody but stogie lovers.
Cigars will remain tax-free because they are the mainstay of a thriving industry in Pennsylvania. Legislators say they want to keep it that way.
"You have an industry that has been built here because of Pennsylvania's treatment of cigars," said State Sen. Pat Browne (R., Lehigh), chairman of the Appropriations Committee, "and that is the wholesale distribution of cigars. If you decide to move against that, you are essentially destroying a partnership that will encourage that business to vacate, to leave. And they would go to Florida."
Florida and Pennsylvania are the only states that do not tax cigars of either the premium or the gas-station variety. New Hampshire exempts only premium types from taxes.
Browne estimated that the cigar industry in Pennsylvania provides more than 1,000 jobs.
In King of Prussia, John Middleton Co., a subsidiary of Altria, manufactures popular machine-made cigars such as Black & Milds, as well as pipe tobacco. In Lancaster County, John Hay Cigars has made hand-rolled premium cigars from leaves grown in Pennsylvania since 1882.
There are also Holt's Cigar Co. in Philadelphia, creator of the Ashton brand; Cigars International in the Bethlehem area; and the Famous Smoke Shop in Easton, an online cigar store.
Altria's website boasts that its Black & Mild brand is "the second-largest selling large machine-made cigar in the U.S."
Legislators say those numbers translate into jobs for Pennsylvania residents. Altria employs about 480 Pennsylvanians, "more than 400" of them at the Middleton plant in Montgomery County, according to a company spokesman. Cigars International has more than 250 employees, according to its website.
"We certainly didn't want to jeopardize the folks that work in that industry," said Rep. Bill Adolph (R., Delaware), chairman of the House Appropriations Committee. "The cigar industry is kind of homegrown, and we would like to keep it here."
The revenue that would be generated from taxing cigars - by Browne's estimate, $28 million annually - is "relatively modest" compared with job losses should companies vacate.
That explanation doesn't pass muster with Eric Epstein.
"The industry is not going anywhere," said Epstein, coordinator of rockthecapital.com, a political watchdog site.
Other states with large tobacco industries tax cigars, he said. That Pennsylvania does not is the result of "a very aggressive and well-financed lobbying campaign," Epstein said.
Tobacco interests drop big money in Harrisburg. Since 2014, Altria has spent more than $1.8 million on lobbying. In that same period, 34 lobbyists from four firms have promoted their clients' interests in the Capitol.
In 2015, Altria, which also manufactures top cigarette and chewing tobacco brands, spent just shy of $1 million on political contributions and related expenses, according to the Department of State, which oversees elections and campaign finance reports.
Keep Jobs in the USA, a cigar-affiliated political action committee, has received contributions from Cigars International, Famous, and Holt's executives, among others, and reported spending more than $100,000 since 2014 on political contributions and other expenses.
Ron Kaufman owns a vape shop in Willow Grove. He called the new 40 percent tax on vapor and e-cigarette products a "business crusher" that will most likely lead to the demise of his and others' small businesses. He pointed out that cigars contain tobacco while vaporizers do not, and that the latter sometimes help customers end their tobacco use.
"A lot of what they're doing is patently illogical," Kaufman said. But "cigars have been around for a long time; vaping is new."
Some in the Capitol have privately grumbled that cigars were spared in part because many legislators like to smoke them, conjuring up images of cigar-chomping politicians doing themselves a favor.
As explanations go, Steve Miskin, spokesman for the House Republicans, doesn't think much of that one.
"Honestly, if that were the case, chew would have still been exempt, because a number of members chew," he said.
The presence of the tobacco industry and its lobbyists in the Capitol, he said, definitely influenced the exemption of cigars in the revenue package.
"When you do have a manufacturing base, large employers," he said, "members listen."
shawcolt95@gmail.com
@coltshaw_
Resource : http://articles.philly.com/2016-07-20/news/74587208_1_cigars-international-cigar-industry-john-middleton-co
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