Cigar Price Check
Wednesday May 13, 2009
We are all concerned about rising prices on cigars after the increase in federal excise taxes on April 1, 2009. Retail prices on most cigars did not rise immediately, but we are now beginning to see some significant increases. Back on March 31, 2009, before the increase in federal excise taxes on cigars took effect, our Cigar Price Detective visited several cigar retailers and stocked his virtual shopping basket with a sample of 36 handmade cigars, making a note of the price of each cigar when purchased by the box or sampler pack. On May 12, the new price on each sample cigar was again duly noted. Based on this limited nonscientific sample, we bring you the following observations, plus a recommendation:
- Prices of premium cigars in the sample basket rose an average of 6% during the period from April 1 to May 12, 2009, after the hike in federal excise taxes. However, the price change on individual cigars ranged from a decrease of 1.51% to an increase of 75%.
- Price increases varied by both individual cigar and individual retailer. There did not seem to be any consistency in the markups, except for one retailer who did not increase the price on any of the sample cigars. (Kudos to Cigars International!)
- More than ever before, it pays to price shop for your favorite cigars. As indicated in the comments to a previous post, cigar prices are "ALL over the place and each retailer is working to figure out a happy medium on each brand". Prices are expected to continue to go up in the weeks and months ahead, and we will continue to monitor the situation. Therefore, if you did not already stock up on your favorite cigars, do it now!
Comments
I think its important to point out that the retailers are not to blame for these price increases. I do hear complaints like, “Man, your price went up $20 in a month!” and “these price hikes are just taking advantage of the consumers”.
If you’re a consumer and a cigar buyer you should blame your government and the cigar manufacturers for these price increases. The government put a tax on the cigars and the manufacturers decided that since everyone was already prepped for a price increase it would be a great time for them to also raise their prices. The manufacturers used the tax to camouflage their price increases and guess who has to do all of the explaining? You guessed it - the retailer.
Most online sources are catching up to the wild increases that each manufacturer has decided on. I think we are going to see a little more price increase and then some leveling off.
I think it’s fairly evident now why Rocky Patel et al did their best to fight this increase in taxes. It is only the beginning and, as one can already tell, it’s not simply a $0.40/cigar tax. As outlined above and as documented by Gary, there are tons of problems that go along with the increase in tax. The next time your government decides they want to tax you because you smoke it is your responsibility to call and e-mail them to let them know that they will NOT be getting your vote come next election if they vote to tax your cigars more. This has to be a joint effort from cigar smokers, retailers, manufacturers, and cigar celebs to FIGHT against more taxation. Trust me, this is just the beginning… with the rampant spending and borrowing this administration is even considering taxing soda!
Living in California, here is the response I get when I email “my” senators to voice my opinion on anti-smoking and tobacco tax hikes: Thank you for the support of this legislation. Seriously, they don’t even read it. They do what they want, not what we want. SCHIP tax is another example of a way to get more revenue from a group that has a small voice, or, in California, no voice at all.
Rob hit it right on the head.
They were looking for an easy route to raise lots of tax revenue to close a budget shortfall. Hitting users of alcohol & tobacco products (aka sin taxes) is an easy way to raise a lot of revenue in a short amount of time. I too received the same canned responses from my “representatives” when I voiced my concerns over the new SCHIP taxes. They didn’t even bother to read my concerns about it the first time it came up for a vote, and I even got a PR notice from them after the first vote (with the much higher taxes), saying that they were “disappointed” that the vote failed. After the second vote passed, I received a new PR email saying that the vote was successful, even after I sent an email protesting the second vote. The feeling that I got was that they really didn’t care what I had to say, and that they were voting along the party line or whatever they cared about.
I will tell you this much, they will continue to raise this SCHIP tax (and others) until the well runs dry. And several states are looking into raising or implementing additional sales taxes that specifically apply to tobacco sales. When we get to the point that tobacco sales drop to historically low amounts due to ridiculous amounts of taxes being added on, we will hear “look at the lives we saved by reducing smoking”, not “hey look at all of these small business owners that we drove out of business”. But then they will have to find another whipping boy to add draconian taxes to.
My concern is that many local cigar stores will by driven out of business due to a drop in sales because of additional taxes on cigars. I shudder to think that the only local purchase option might be to buy a cigar from one of those little cabinets at a gas station - uuuuuggghh.
I purchased many cigars before the tax hike but I too sent many an e mail to my elected officals. Most of them did not respond or gave a canned reply. When you tax an item which will eventually have a diminishing return, you will tax other items.
Smoking cigars which is big joy for me is not for most politicans even a blip on their radar screen. In LA , it is a struggle to find a place to smoke indoors and soon enough we will not be able to smoke outdoors. I feel like a pariah in my town. I can smoke pot legally if I get the proper ID , but I can be fined if I smoke a cigar. Crazy world ain’t it?