Taxes

Help Stop Tobacco Tax Parity Act of 2010

NoMoreTobaccoTaxes — Fri, 29 Jan 2010 20:31:53 GMT

Ok, so hopefully by now you've contacted your local representatives in Congress about stopping HR 4439. If not, you can stand up and be counted using this website.

How else can you help? Get your fellow pipe smokers active in this cause! To make it easier to do so, you'll find attached to this posting a copy of a PDF file that you can print up, cut up and hand out to all you know. This will hopefully make it easy for them to find the Rally Congress site set up to stop this affront to our sensibilities.

Everyone is free to download and use this document to help in this new fight against tyranny!

Pipe Tobacco To Be Taxed At Roll-Your-Own Rates?

NoMoreTobaccoTaxes — Fri, 22 Jan 2010 17:32:57 GMT

HR 4439, the Tobacco Tax Parity Act of 2010 was introduced on January 13, 2010 and would tax pipe tobacco at the same insane rate ($24.78 per pound) as roll-your-own tobacco from the current $2.8311 per pound. Introduced by Representatives Steve Cohen (Dem., TN) and Lloyd Doggett (Dem., TX), it has been referred to the House Ways and Means Committee of which Mr. Doggett, a staunch anti-smoking advocate, is a member.

This bill is not really aimed at pipe smokers as that segment of the population (estimated at .01% of US adults) is so small that the additional revenue generated by PIPE SMOKERS wouldn't cover the cost of pursuing this change. nothing more than an attempt to rope in taxes from roll-your-own cigarette enthusiasts who having been stung by this same price increase in their addiction last spring (thank you SCHIPs) have decided to start rolling pipe tobacco because it is suddenly cheaper real RYO tobacco (if you can call that stuff tobacco really).

Unfortunately, the RYO industry has brought this on to a certain extent because many brands/bags of RYO tobacco have been relabeled as pipe tobacco for taxation purposes. You can tell by looking at the type and the cut of the tobacco that no right-thinking brother of the briar would even consider sticking this trash in their pipe but the manufacturers have proudly changed their RYO packaging to crow that what they are selling is now pipe tobacco and should be taxed at a much lower rate.

Well now, those few of us that truly enjoy a pipe, whether meerschaum, briar or even the old American favorite corncob pipe are going to have to pay through the nose because of RYO smokers trying to inexpensively fuel their addictions AND the greed of corporate RYO tobacco producers.

However, all is not lost.

Contact your local representatives and put pressure on them to stop this bill. If we don't stop this now, it could spell the end of a tradition here in the US: the considered pursuit of the perfect smoke by brothers (and sisters) of the pipe as well as the end of the traditional Tobacconist as we know it.

SPEAK UP NOW AND SPEAK UP LOUDLY!

In case you didn't link through to read the full text of this proposed bill, here is the full text of it as of today:

111TH CONGRESS
2D SESSION H. R. 4439
To amend the Internal Revenue Code of 1986 to impose the same rate
of tax on pipe tobacco as is imposed on roll-your-own tobacco.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 13, 2010
Mr. COHEN (for himself and Mr. DOGGETT) introduced the following bill;
which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to impose
the same rate of tax on pipe tobacco as is imposed
on roll-your-own tobacco.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Tobacco Tax Parity Act of 2010’’.

SEC. 2. PIPE TOBACCO AND ROLL-YOUR-OWN TOBACCO RATE PARITY.
(a) IN GENERAL.—Subsection (f) of section 5701 of the Internal Revenue Code of 1986 is amended by striking ‘‘$2.8311 cents’’ and inserting ‘‘$24.78’’.

(b) EFFECTIVE DATE.—The amendments made by this section shall apply to articles removed (as defined in section 5702(j) of the Internal Revenue Code of 1986) after the date of the enactment of this Act.

Flavored Cigarette Ban Starts Tuesday, Sept. 22nd

NoMoreTobaccoTaxes — Fri, 18 Sep 2009 22:22:20 GMT

The Smoking Prevention and Tobacco Control Act, signed into effect by President Barak Obama on June 22 2009 has a provision that prohibits any flavored cigarettes (except for menthol of course) from being sold as of Tuesday. In a “Letter to Industry on Cigarettes Containing Certain Characterizing Flavors”, sent to tobacconists across the country on September 14th, states that

establishes a tobacco product standard special rule for cigarettes that states in part:

…a cigarette or any of its component parts (including the tobacco, filter, or paper) shall not contain, as a constituent (including a smoke constituent) or additive, an artificial or natural flavor (other than tobacco or menthol) or an herb or spice, including strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, or coffee, that is a characterizing flavor of the tobacco product or tobacco smoke.

This standard applies to all tobacco products that meet the definition of a “cigarette” in section 900(3) of the Act even if they are not labeled as “cigarettes” or are labeled as cigars or as some other product.

Of course, they don’t really explain what the text of Section 900(3) is so many tobacconists have been struggling to try and understand what that means. Does that mean that pipe tobacco and cigars WILL be affected? At face value this could be the case.

Here is the actual text of the appropriate section:

‘‘SEC. 900. DEFINITIONS.

‘‘(3) CIGARETTE.—The term ‘cigarette’—
     ‘‘(A) means a product that—
         ‘‘(i) is a tobacco product; and
         ‘‘(ii) meets the definition of the term ‘cigarette’ in section 3(1) of the Federal Cigarette Labeling and Advertising Act; and
     ‘‘(B) includes tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette or as roll-your-own tobacco.
‘‘(4) CIGARETTE TOBACCO.—The term ‘cigarette tobacco’ means any product that consists of loose tobacco that is intended for use by consumers in a cigarette. Unless otherwise stated, the requirements applicable to cigarettes under this chapter shall also apply to cigarette tobacco.

The Section referred to above is most likely Title 15, Chapter 36, Section 1332(1) of the US Code:

(1) The term “cigarette” means—

(A) any roll of tobacco wrapped in paper or in any substance not containing tobacco, and

(B) any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in subparagraph (A).

So, using the above, it would appear that cigars will not be affected. It is pretty clear that taking a cigarette and calling it a little cigar is not going to exempt that product from this section of the act. However, truly legitimate little cigars will. However, there is wiggle room provided by the appearance portion of (1)(B) above.

However, where does this leave the pipe smoker? Our vendors tell us this is not going to present a problem, however the verbiage in Section 900(3)(B) could be loosely interpreted to include pipe tobacco because people COULD purchase pipe tobacco for RYO cigarettes. We’ve even seen some vendors bagging up RYO flavored cigarette tobacco and labeling it as pipe tobacco. One look at the tobacco will confirm that it isn’t pipe tobacco despite what it says on the packaging.

Originally I assumed this was an attempt to get around the $24/pound federal tax on RYO products (Thank you SCHIPPs) but it may be an attempt to get around this restriction as well. One hopes that shenanigans like this or extensive use of pipe tobacco by cigarette smokers doesn’t cause a crack-down on pipe tobacco.

Comments or thoughts on this topic? Please use the feedback mechanism shown below…

Jobs Go Up In Smoke: Thanks SCHIPs

NoMoreTobaccoTaxes — Wed, 02 Sep 2009 18:57:31 GMT

CNN ran a nice article about the demise of Hav-A-Tampa cigar company that was killed as a result of SCHIPs and moved off-shore to Puerto Rico.

Ironically, children of the worker profiled in this story are now eligible for insurance under the program that put their father out of work in the first place.

You can read the full story here.

And if you know of any jobs to offer to these folks, you can check out the website at havatampaneedsjobs.com.

State of California is At It Again!

NoMoreTobaccoTaxes — Thu, 18 Jun 2009 17:06:57 GMT

From a press release from the IPCPR

Sacramento, California June 18, 2009 – California legislators are grasping at tax straws that don’t exist as they seek to raise billions of dollars that don’t exist for a balanced state budget that doesn’t exist, according to the International Premium Cigar & Pipe Retailers Association.

Two legislators – Democrat Assemblyman Tom Torlakson of Contra Costa County and Democrat State Senator Alex Padilla of Los Angeles – have introduced AB89 and SB600, respectively. The bills propose to increase tobacco taxes to as much as $2.10 per pack of cigarettes on top of the current $.87 per pack state tax and recently increased federal taxes of $1.00 per pack plus correspondingly stiff increases on other tobacco products like cigars and pipe tobacco.

“It’s easy to call these ‘tobacco taxes’, but the truth is they are discriminatory taxes that target some 15 percent of California adults who enjoy tobacco in one form or another , whether they smoke cigarettes or savor hand-made cigars” said Chris McCalla, legislative director of IPCPR.

“Real people pay these taxes… real people at all economic levels who vote and who have had enough overspending by government. They are customers of our more than 200 members throughout the state of California who are smoke shop owners and manufacturers or distributors of premium cigars and other tobacco products. They are, for the most part, small, family-owned businesses that employ thousands of their neighbors. As taxes go up and sales go down, their businesses are as threatened as the jobs of their employees and the sales, income and other taxes collected by the local, state and federal governments,” McCalla said.

Proponents of increased tobacco taxes claim they will make it more difficult for under-aged individuals to purchase cigarettes.

“Higher taxes do not make it more difficult for teen-agers to purchase tobacco… they only make it more expensive for them and everyone else. If we want to keep kids from smoking – and we agree that everyone should support that goal - we should be enforcing the laws that are already on the books as do all members of the IPCPR,” said McCalla.

McCalla disagreed with an editorial in a California newspaper (Wednesday, June 17, Los Angeles Times) that said increasing state tobacco taxes would be a “fair and constructive” way to find “balance” for the budget.

“The bills’ sponsors are estimating that these new, taxes on 15 percent of Californians might generate up to $2 billion as the state seeks to fill its $24 billion deficit. That is anything but fair, constructive or balanced,” McCalla said.

Here is the original LA Times Opinion piece entitled Taxing Tobacco. Thankfully it appears that the Govenator will veto Democrats’ plan for a balancing budget that relies on levies intended to raise $1.9 billion in new taxes on oil and tobacco, and fees on motorists to fund state parks, that Schwarzenegger said would be unfair to Californians after higher taxes were imposed on them in February.

"None of that will fly with me," the governor said. "It will be irresponsible after the largest tax increase in California's history just four months ago to go back to the people and to say we want to increase your taxes but we want to protect the salaries of state workers."

Stand up for your rights. Let Schwarzenegger know you support his veto and contact your state representative and senator and let them know you will NOT be taxed unfairly just be cause tobacco is considered an easy, PC target!

SCHIP Update

NoMoreTobaccoTaxes — Tue, 24 Feb 2009 02:25:19 GMT

Tobacco users unfairly bear the burden of supporting expansion of this program!

In case you’ve been living under a rock lately, you’ve probably heard that this unfair taxation act has passed. The Children’s Health Insurance Program Reauthorization Act of 2009 (Public Law 111-3) that was signed into law by President Obama on February 4, 2009.

You can find a summary from the TTB.Gov site at http://ipcpr.org/legislation.html. While they haven’t yet published the required rulemaking documents about the implementation of the provisions of this Act.

The Act increases the Federal excise tax on all tobacco products and cigarette papers and cigarette tubes, effective April 1, 2009. In addition, the Act imposes a floor stocks tax on all tobacco products (except large cigars), cigarette papers and cigarette tubes held for sale on April 1, 2009. A floor stocks tax is a one-time excise tax placed on a commodity undergoing a tax increase. The amount of the floor stocks tax is equal to the difference between the new tax rate and the one just previous to it. Any person who holds tobacco products (except large cigars), cigarette papers, or cigarette tubes is liable for the floor stocks tax on April 1, 2009.

Here is their graph of how the taxes, and the anticipated floor tax, will break down:

Tobacco Product	Tax Rate effective March 31, 2009	Tax Rate effective April 1, 2009	Floor Stocks Tax Rate (difference between the rates)
Small Cigarettes - Class A (Weigh 3 lbs. or less per 1,000)	$19.50 per 1,000 equivalent to: $3.90 per carton $0.39 per pack	$50.33 per 1,000 equivalent to: $10.066 per carton $1.0066 per pack	$30.83 per 1,000 equivalent to: $6.166 per carton $0.6166 per pack
Large Cigarettes - Class B (Weigh more than 3 lbs. per 1,000)	Up to and including 6½” long: $40.95 per 1,000	Up to and including 6½” long: $105.69 per 1,000	$64.74 per 1,000
	Over 6½ “ long: Each 2¾” counts as 1 paper, then $19.50 per 1,000	Over 6 ½ “ long: Each 2¾” counts as 1 paper, then $105.69 per 1,000	Over 6½” long: $64.74 per 1,000
Small Cigars (Weigh 3 lbs. or less per 1,000)	$1.828 per 1,000	$50.33 per 1,000	$48.502 per 1,000
Large Cigars (Weigh more than 3 lbs. per 1,000)	20.719% of sales price but not to exceed $48.75 per 1,000	52.75% of sales price but not to exceed $0.4026 cents per cigar (or $402.60 per 1,000)	NOT PART OF FLOOR STOCKS TAX
Chewing Tobacco*	$0.195 per pound	$0.5033 per pound	$0.3083 per pound
Snuff*	$0.585 per pound	$1.51 per pound	$0.925 per pound
Pipe tobacco*	$1.0969 per pound	$2.8311 per pound	$1.7342 per pound
Roll-your-own tobacco*	$1.0969 per pound	$24.78 per pound	$23.6831 per pound
Cigarette paper	Up to and including 6 ½” long: $0.0122 per 50	Up to and including 6½” long: $0.0315 per 50	$0.0193 per 50
Cigarette paper	Over 6 1/2“ long: Each 2 ¾” counts as 1 paper, then $0.0122 per 50	Over 61/2“ long: Each 2 ¾” counts as 1 paper, then $0.0315 per 50	Over 6½” long: $0.0193 per 50
Cigarette tubes	Up to and including 6½” long: $0.0244 per 50	Up to and including 6½” long: $0.0630 per 50	$0.0386 per 50
Cigarette tubes	Over 6½ “ long: Each 2¾” counts as 1 tube, then $0.0244 per 50	Over 6½ “ long: Each 2¾” counts as 1 tube, then $0.0630 per 50	Over 6½” long: $0.0386 per 50

Wise smokers of cigars and pipe tobacco will want to contact their local tobacconist before April 1, 2009 in order to stock up on their supplies before the taxes take effect. Not only will they be saving money, but hopefully help their struggling local tobacconist out by reducing their floor tax exposure on items that aren’t considered Large Cigars.

Stop SCHIPS Expansion – A Smoker’s Call To Action!

NoMoreTobaccoTaxes — Fri, 12 Dec 2008 20:55:29 GMT

It isn’t “about the children” as the sound bites might indicate. What it is about is the unfair taxation of a small portion of the population to fund a program that affects ALL of the citizens of the US.

The following is a press release from the National Association of Tobacco Outlets advising all responsible consumers of tobacco products to make their voices heard on this subject. It is imperative that we all band together and speak out against this unfair taxation of a small segment (less than 10%) of society for a program that has universal concerns. Why put this on our back?

A Call to ACTION on SCHIP Tax Increases!

If Congress passes a bill early in 2009 to expand the State Children’s Health Insurance Program (SCHIP) by significantly increasing the federal cigarette and tobacco taxes, the fallout from this expansion of government subsidized health care will likely include major cigarette and tobacco sales reductions, large increases in the number of store robberies because the value of tobacco products would be so high, a floor stocks tax on cigarette and tobacco inventory adding up to an estimated $5,000 per store, employee layoffs and even store closings.

The SCHIP program is a top priority for Democrats and may result in the single largest tax increase on one industry’s products in the history of the country. With President-Elect Obama a supporter of SCHIP, the possibility of a tobacco tax increase to fund the expansion looms large even though Obama made campaign promises not to increase taxes on any one who earns less than $250,000. The 2007 SCHIP bills proposed the following increases in the federal tobacco excise tax rates:

Tobacco Product

Current Tax Rates

SCHIP Bill Tax Rates

Percentage Tax Increase

Cigarettes

39¢ per pack

$1.00 per pack

156.4%

Large Cigars

20.719% of manufacturer’s price; cap of 4.875¢/cigar

53% of manufacturer’s price; cap of $3.00/cigar

6,000%

Little Cigars

4¢ per pack

$1.00 per pack

2,197%

Pipe Tobacco

$1.0969 per pound

$2.8126 per pound

156.4%

Chewing Tobacco

19.5¢ per pound

50¢ per pound

156.4%

Snuff

58.5¢ per pound

$1.50 per pound

156.4%

RYO Tobacco

$1.0969 per pound

$8.8889 per pound

710.36%

The Time to Act is NOW!!!

NATO’s legislative staff members are sending out to association members customer alert sheets to place on store counters and personalized letters addressed to each retailer and wholesaler’s particular U.S. Senators and Representatives. NATO members need to call their Congressional representatives, urge their employees and customers to do the same and fax the personalized letters to Washington, DC. All the names, phone and fax numbers of the particular Congressional representatives are being provided. NATO members need only dial the phone and fax the letters. Your voice and the voice of your customers need to be heard.

Turbulent Time for Tobacco Requires Grassroots Efforts

No one can say with 100% certainty how the SCHIP legislation will finally be resolved by Congress in 2009. What can be said is that the SCHIP bill is just the beginning of what will be a turbulent year for the tobacco industry. With some in Congress supporting federal cigarette and tobacco tax increases to expand SCHIP and more than 30 states with large budget deficits some of which will also propose higher tobacco taxes as well, NATO wants to remind its members that they must continue to contact their elected officials to be heard on tobacco issues. Maintaining that dialogue and urging customers to make phone calls continues to be an important part of opposing unfair tobacco legislation.

So don’t sit by idly and watch your tobacco products get taxed by an increase of up to 6000%, write, or better yet, call your local congress person or senator and let them know that this is just plain WRONG!

SCHIP Bill Continues to be Priority of New Administration

NoMoreTobaccoTaxes — Fri, 21 Nov 2008 23:12:40 GMT

Industry Lobbyists' Consensus Sees Compromise Holding For Next Round of SCHIP Deliberations

November 21, 2008 - As rumors continue circulating about SCHIP in 2009, CAA's and IPCPR's lobbyists, along with several industry consultants, met to share new information and prognostications regarding legislation to renew and expand the State Children's Health Insurance Program (SCHIP).

While tempered with a bit of caution, all parties participating on the conference call remain confident the compromise that was reached and agreed to by Congressional leaders will be incorporated into yet-to-be reintroduced SCHIP legislation.

General consensus among industry lobbyists and consultants holds that despite campaign rhetoric, the reality of governing, particularly in the economic circumstances faced by all segments of the economy, will prove difficult for the new Administration's legislative priorities to be quickly approved.

With those caveats in mind, there were three consensus views that emerged:
While there are credible scenarios that would delay SCHIP, there was much agreement that SCHIP will likely be an early priority of the new administration.
House leadership has signaled it will likely be among the top three priorities of the Congress/Administration. SCHIP has passed the Congress twice in 2007, so passing the "old" bill with the "compromise" language would be an easy step.
The make-up of the new House and Senate is even more favorable than before and the new President will eagerly sign the bill. Under this scenario, SCHIP would provide a high profile legislative victory and a down payment on the health care agenda.

The International Premium Cigar & Pipe Retailers Association (IPCPR) is a not-for-profit trade association organized as the advocate for the independent retail tobacconist and recognized as the "Voice of Authority and Reason" on premium tobacco related issues.

Tobacco Product	Current Tax Rates	SCHIP Bill Tax Rates	Percentage Tax Increase
Cigarettes	39¢ per pack	$1.00 per pack	156.4%
Large Cigars	20.719% of manufacturer’s price; cap of 4.875¢/cigar	53% of manufacturer’s price; cap of $3.00/cigar	6,000%
Little Cigars	4¢ per pack	$1.00 per pack	2,197%
Pipe Tobacco	$1.0969 per pound	$2.8126 per pound	156.4%
Chewing Tobacco	19.5¢ per pound	50¢ per pound	156.4%
Snuff	58.5¢ per pound	$1.50 per pound	156.4%
RYO Tobacco	$1.0969 per pound	$8.8889 per pound	710.36%