A tax break for the cigar smoker?

In the list of people in Minnesota who are suffering, can anyone top the smoker of premium cigars?

So it’s no wonder that House Taxes Committee chair Greg Davids succeeded in adding language to a tax bill that gives a break to Big Cigar.

Cigars are taxed at 95 percent of the wholesale price, topping out at $3.50. Davids’ provision cuts the maximum to 50 cents, the Rochester Post Bulletin says.

“People are still smoking premium cigars. It’s just that they aren’t getting them from Minnesota retailers,” Davids said.

Cigar retailers testified earlier this session that the taxes are hurting their business, especially with mail-order cigar operations doing a big business here.

Hurting business is the goal of most tobacco taxes, but it also shows the paradox of combining a budget with a health initiative. Opponents say it’ll cost the state $3.4 million if the tax is removed. But eliminating the incentive to buy a cigar (or any other tobacco product) will cost the state, too. Pick one.

“We are worried that bringing (cigars) into a lower price makes them affordable to younger people,” Anne Mason Yoder, of ClearWay Minnesota, told the PB.

The cigar lobby won a similar battle in New York last month when the state’s assembly rejected an attempt to replace a 75 percent tax with a flat 45-cents-per-cigar tax. At the same time, however, that would have been a tax break for premium cigars.

  • BJ

    Sometimes you have to wonder what is wrong with people.

    • MrE85

      Word.

    • Gary F

      The insatiable beast called government must be fed.

      • Rob

        No taxes, no roads, no social security.

  • Gary F

    I know the guys that own St Croix Cigars in Hudson, they are just fine with Minnesota’s tax.

    There is no reason to buy a cigar in Minnesota, buy them off the internet.

  • HawkEye

    I don’t know about y’all, but I haven’t met many “younger people” who are spending $10 per cigar.

    • MrE85

      See? It works!

      • BReynolds33

        Saying kids don’t smoke premium cigars because of the 95% tax is like saying 21 year olds don’t drink high end whiskey because they can’t afford it. Most younger people don’t have the time, or inclination, to smoke cigars, or to drink high end whiskey.

        • Bingo.

        • jon

          I smoked a few cigars (a maybe half of them “high end”) in my 20s… Drank some high end whiskey then too.

          I might smoke a few more cigars in my life time (nearly all of them high-end) and I’ll probably go through a few more bottles of high-end whiskey, probably both at the same time hopefully on really good summer evenings.

          The disposable income isn’t there for imbibing as regularly as I once did in discussing luxuries… Now I’m a grown up (do not recommend) and excess money goes to a 401k or employee sick purchase or savings or home repairs…

          Maybe you are right and my experience is abnormal… But amongst the folks I hung out with in my 20’s it seems we all have backed off on some of the finer things as we agreed into our 30’s…

    • Gary F

      My son and his friends do, but not every day or every week.Maybe a couple a month, by the campfire type a deal. Not like the weed smokers buying blunts.

      • Ralphy

        There you go!
        A 95% tax on weed!
        Brilliant!

        No wait!
        A 50 cent tax on weed.
        Whatever.

        • DavidG

          It’s worked pretty well for Colorado so far.

          • Kassie

            Colorado, Washington, Oregon, Massachusetts, California, Maine, Alaska, Nevada and now Vermont have all legalized recreational weed.

          • DavidG

            Colorado (and Washington) being the longest, is a better demonstration of the positive tax revenue impact though.

  • MrE85

    “Hurting business is the goal of most tobacco taxes…”

    That’s not how Anne or I would put it, but if by “business” you mean sales to young people, than yes. Reducing youth smoking is the goal.

    • I think suggesting the anti-tobacco groups are only focused on “youth smoking” is a tad disingenuous.

      • MrE85

        It is very hard to get our message through to younger smokers. The proven health risks just don’t worry them like it does older smokers. However, we have seen time and again that higher prices for tobacco products DO reduce youth smoking.

        Sure, preventing youth smoking isn’t our ONLY focus, but in this case, it is. Ditto on the recent push to raise the age to legally buy tobacco products to 21.

        • Gary F

          What about all those big spending politicians that need a fix?

        • BReynolds33

          Maybe you should try not being patronizing in your messages. Like the ad that showed kids looking at flavored cigars and suggesting they thought they were candy. Other than the fact as soon as the kid were to open one, and taste it, they would quickly realize it is not candy and be done with it.

          I’m not entirely convinced that taxes drive smoking rates lower. The appeal of smoking, the “cool” factor isn’t there anymore, and younger people simply don’t want to do it. Informing them of the health risks drives smoking down, not higher prices.

          As for making the smoking age 21… meh. It will do absolutely nothing. It’s already 18, and 15 year olds smoke. Prohibition has never worked as a remedy for controlling vice. Not once. But sure, let’s draft kids into military service, and let them pick the leaders of the country, but not let them buy a cigarette. Seems we’re allowing them to make choices that effect others, but not themselves.

          • I assume the “youth cigar” market is basically Swisher Sweets?

          • BReynolds33

            Yeah. That type. Lots of brands, but you’re on the right track.

          • MrE85

            Bingo. Or any other of the fruit flavored mini-cigars and other tobacco products.

    • Gary F

      When you tax something you get less of it, including taxing work.

      • Ralphy

        When you tax something, you get more of something else. Like military, roads, airports, police and fire departments, hospitals, stadiums…

        To argue that taxing something is but a take-away is simply not honest.

        Your comment about taxing work seems counterintuitive to me. If I need $X net to live the life I want, and I am taxed on my earnings, I will work more to make up the delta.

  • BReynolds33

    I rarely buy my cigars from anyone in Minnesota for exactly this reason. Far too many online shops available that will bring them right to my door for a third of the cost. They can raise the tax to 1500% of wholesale if they so choose. The higher they make it, the less likely they will ever collect it.

    • Nobody seems too concerned about Amazon’s effect on local retailers. Then they go DEFCON 1 on cigars. Weird.

      • BReynolds33

        I’m not entirely sure I am following, here, but Amazon’s effect on local retailers wasn’t about the state running taxes up so high that I can’t afford to shop at Target. Amazon is simply a better business model for most of the purchases I make, with more selection and ease of use.

        Vices will always be a hot topic. The people with those vices don’t like being told they can or cannot have that vice. Sunday liquor sales, recreational marijuana use… it’s all someone else trying to tell me what I can and cannot do to my own body, on what days, and at what times. Many of us don’t feel we need our hands held. the DEFCON 1 status is likely due to an absurd 95% tax rate. The number of products that carry a 95% tax are pretty low.

      • MikeB

        I am actively reducing my use of Amazon for this reason. It’s probably too late for books and music overall. And living in a rural area I won’t eliminate buying online. But even in the sticks I get my craft beer fix

      • Ralphy

        I completely agree.
        Political movements are fueled with buy American sentiments. Until we commit to buying local, buying American doesn’t have much value to most communities or store keepers.
        Beating the state tax by shopping on-line = not doing business locally to avoid paying taxes.
        The logical result of this is either the death of local retail -or- tax code being changed so that purchases made on-line are taxed at the buyers local rate.
        I, for one, would favor a leveling of the playing field.

  • Kassie

    I’m guessing about 75% of the cigars purchased at in MN are cheap ones from the corner store that are cut open, the tobacco dumped, and then filled with marijuana.

    • Gary F

      Yup, amazing how many I see getting sold at SA.

      I’m not sure how they are taxed compared to premium cigars.

      Its been many decades since my weed days, but isn’t buying a blunt more expensive than papers or pipe/bong?

      • Kassie

        People have preferences and some like blunts. Marijuana is now a huge legal industry for much of the country. People spend hundreds of dollars on vaporizers and other contraptions. As with anything, for some people, price is no object.

      • RBHolb

        It covers up the smell. I know when I see someone with a grape-flavored cigar, I run the other way.

    • MrE85

      That’s a blunt statement. (ducks)

      • Rob

        Here’s a small tokin’ of my appreciation for your pun.

      • Jason West

        It’s true, but those aren’t legally considered premium. I think premium must be long fill, have no tip and it might not be able to have an added flavor, must have a minimum cost and minimum weight per 1,000. If this isn’t the law, it’s been proposed to be law.

    • BReynolds33

      Backwoods, and the like, are not “premium cigars” under this tax. And if anyone has enough weed to cut open an Opus X and fill it with pot, I’m fairly certain they can afford the 95% tax.

  • Mike Worcester

    Is there a class component to this issue? Are cigar smokers considered to be a different demographic from cigarette smokers? (I tried to find a breakdown online of the traits of cigar smokers but all I could find was propaganda from either cigar manufacturers or anti-smoking advocates.)

    • BReynolds33

      My guess is yes. Cigarette taxes are often seen as taxes on the lower end of the economic scale, while cigar taxes are generally seen as taxing the upper end. In truth? Both are probably a tax on the middle class. As always.

  • Mike

    The idea that the government can or should tax certain private vices out of existence is both naive and totalitarian. But we do Puritanism better in America than anywhere else in the world, so this is nothing new. Sometimes it comes under the guise of “conservatism” and sometimes under the umbrella of “liberalism,” but it’s really all the same.

    Keep the taxes reasonable, and both the government and smokers could be happy. But that never satisfies the zealots.

    • MikeB

      I can think of numerous examples where Puritanism is practiced much more efficiently than here in the good ol’ USA.

      And who decides what’s reasonable? I have my gripes as well but the back and forth works out overall.

      • Mike

        What culture in the developed world has more hangups about the question of private vices than the U.S.? The only one I can think of that’s even remotely close is our mother country, Great Britain. But they exported their religious fanatics here centuries ago, so that helped.

        • MikeB

          Saudi Arabia for one.

          • Mike

            You consider Saudi Arabia a developed country? It’s an absolute monarchy without civil rights for anyone, especially women. Wealth does not signify development.

          • MikeB

            Yeah, I glided over the term developed in your 2nd comment. But my point is that tax rates on various products is not a form of totalitarianism. Some of it is regulation, some of it is rent seeking, and some is just habit. The developed world uses trade protectionism at various levels so while vices may get a pass, agriculture and other products are heavily regulated to the point we think is completely unreasonable.

          • Mike

            My main point is that a 95% tax rate is by no definition reasonable, and is clearly meant as a severe disincentive to purchasing. It stops short of outright prohibition, but the intent is the same, and that intent is totalitarian. It says, “I don’t care what you want; I know what’s best for you, and I’ll compel you by law to follow my wishes or be punished for it.”

          • X.A. Smith

            Or it says, “consumption of these products is a public health hazard, and someone has to pay for the ill effects.”

          • Mike

            Lots of things are health hazards but are punished only nominally, or not at all: driving while texting, overeating, unprotected sex, excess drinking, etc. Why single out smoking?

            A modest tax on any substance can help with regulation, and there’s nothing wrong with that. But a 95% tax is not reasonable by any definition. It’s meant to punish. If you think smoking is worse than various other things, that’s your opinion and you’re entitled to it. However, from a rational perspective, it’s highly selective.

          • X.A. Smith

            It’s a 95% tax up to $3.50, first of all. Also, only one item in your list is a chemical addiction, like smoking. Driving while texting and unprotected sex are not sales related at all, and overeating involves food, which everyone needs. Nobody needs cigars.

          • John

            you missed alcohol (and I missed your response until after I submitted mine). Of course, alcohol is already taxed higher than other things, so . . .

          • X.A. Smith

            Alcohol is the one item in the list that can cause chemical addiction. I wouldn’t mind higher taxes on alcohol if the money went to helping people with addiction.

          • John

            well. . . your list. . .

            driving while texting: Several groups are working on making that punishable.

            overeating: ditto – though I suspect it’s hard to tax something based on quantity purchased/consumed (buffet tax)? A progressive tax on steak? Soda, candy, fast food taxes come to mind as efforts to do exactly that – tax the foods that are “bad” for you.

            unprotected sex: That creates tax payers, and seems to be encouraged by certain segments of society (so, you have a point here).

            excess drinking: Alcohol taxes are pretty high, compared to other things you eat/drink, so poor example here.

          • Ralphy

            Taxes and tax credits have long been used in promoting socially desired choices (tax credits for weatherizing one’s home); and for punishing socially undesirable choices (smoking tobacco). It is a credible and effective tool.

          • Mike

            There’s a lot of gray between having no “sin” taxes at all, and making them as punitive as 95%. If we were to make the latter a consistent philosophy, lots of things would be taxed and/or enforced much more strongly than they are today. And I doubt many people would want to go down that road.

            Tobacco has been made a scapegoat for lots of so-called sins. There are plenty of people who agree with that. Clearly, I’m not among them, and would rather the government used more restraint in these matters altogether.

          • X.A. Smith

            *95% up to $3.50. I understand wanting to make it rhetorically powerful, but it’s inaccurate.

  • Rob

    Smoking is not like other vices, in that it’s inherently harmful. It’s therefore not useful to talk about it as if it’s just another personal choice on the vice continuum that should be free of government interference and regulation. So if high taxes disincentivize more people from smoking, I’m OK with that. If, however, the legislature significantly raises taxes on kinky sex toys and bondage garb, I will be in my representatives’ grills, mos’ def.

  • Mike

    In a number of states, this kind of tax change has enjoyed wide bipartisan support — at that includes states with much lower tax rates than Minnesota, BTW.

    At Minnesota’s prices, even buying just a few premium cigars via mail order including shipping is less expensive than supporting a local store.