A Cigar Tax Update

Following a long, drawn-out political fight started in 2007, President Obama signed into law the State Children's Health Insurance Program (SCHIP) renewal and expansion.

The new federal excise tax rates to take affect April 1, 2009 are as follows:

cigarettes $1.0066/pack
Large cigars 52.75% (capped at 40.26 cents per cigar)
Snuff $1.51/lb.
Chew $.5033 cents/lb.
Pipe tobacco $2.8311/lb.
RYO $24.78/lb.
Little cigars $50.00/1,000

Note - While the new law says that the increase is capped at .4026 cents per cigar....Don't fool yourself! State OTP Taxes are added onto this increase! As an example, in Michigan the actual increase is .5314 cents per cigar. On top of the actual increase, manufacturers, wholesalers, and yes retailers will have to take an increase to maintain their gross margins. My guess is that the cigars will go up an average of .75 cents each and by $15 per box by the time it is all done!

While the tax goes into effect April 1, as I predicted the manufacturers responded by immediately raising prices on all Machine Made Cigars and many of the Premium Cigars. The increase was between 8% & 15% and was effective February 4th to the 9th. So our costs are ALREADY UP WHEN WE ORDER FROM OUR SUPPLIERS!

I fully expect an additional price increase before March 15th, of about the same amount. These increases along with the increase taken last September by the manufacturers will allow them to not increase their prices beginning April 1st or if they do, by a very small amount!

It is our intent to continue to give our customers an opportunity to purchase product before we raise our prices over the next few weeks.

ANNOUNCING....THE LAST CHANCE SALE!

On Saturday February 7th will we launch our week long PRE - SCHIP TAX promotion. In addition to continuing to sell all of our cigars at the old prices, we will be offering SPECIAL PROMOTIONS to help you afford to stock up before we raise prices beginning February 15th.

This is an unprecedented event that puts the entire burden of funding Health Care for Children on the backs of those that use Tobacco! While it provides funding for 100% of the low income Children, it is funded by less than 25% of the population that uses tobacco. THIS IS UNFAIR...BUT IT IS DONE!

I would like to thank everyone that did their part contacting elected officials over the past 3 years as we fought this battle. Today it is the smokers that are taking it on the chin....tomorrow it will be the Beer Drinkers, French Fry Eaters, Soda Drinkers and more. BE PREPARED...at some time the apathetic American People will say enough is enough!THE GREAT AMERICAN TAX REVOLT IS COMING! Our forefathers did not stand by idly while their government put unbearable taxes on them....THEY THROUGH THE TEA IN THE HARBOR!

We promise to continue to do our part in keeping Cigars as affordable as possible to our customers through The Cigar Factory Outlet! We will continue to enjoy our events and comradery at any price! Thanks for your continued business.