Pennsylvania Legislators Consider 30 Percent Tax on OTP

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If Pennsylvanians are finally getting back on their financial feet, the worst thing state legislators can do is raise their taxes, including a new 30 percent tax on tobacco products other than cigarettes, says the International Premium Cigar & Pipe Retailers Association.

If Pennsylvanians are finally getting back on their financial feet, the worst thing state legislators can do is raise their taxes, including a new 30 percent tax on tobacco products other than cigarettes, says the International Premium Cigar & Pipe Retailers Association.

The State’s House Appropriations Committee has approved HB 2435 – a 73-page bill which amends the Tax Reform Code with respect to a wide variety of taxes. It also would, for the first time, impose a 30 percent tax on the wholesale cost of OTP – other tobacco products.

“As hungry as the state is for additional revenues, they have to realize that this proposed tax would hurt business more than help raise tax revenues and, in doing so, would do substantial harm to small businesses across the state,” said Chris McCalla, legislative director of the IPCPR.

McCalla pointed out that 70 Pennsylvania-based members of the more than 2,000 IPCPR members do not represent ‘Big Tobacco.

“We are not ‘big tobacco.’ Premium cigars and premium pipe tobaccos are made primarily by small, family-owned businesses that have been hand-crafting their products for generations. These premium cigars and tobaccos are then sold by smoke shop owners, largely mom-and-pop operators who employ local citizens, serve their neighbors, and pay federal, state and local sales and payroll taxes,” McCalla said.

He also reminded legislators that tobacco doesn’t pay taxes, people do.

“In the final analysis, it would be Pennsylvania’s citizens – largely the middle-class – who would be hurt and have to pay the additional taxes just to enjoy an occasional premium cigar or bowlful, as they might enjoy a single-malt scotch whiskey or a bottle of good wine,” said McCalla. “They would end up doing without or buying their premium tobacco products out of state or from mail-order houses. In both cases, the state ends up getting no revenue whatsoever.”

Heavily taxed tobacco products in other states also have encouraged illegal smuggling into those states, McCalla added.

“So, not only would such a tax on cigars potentially cause the loss of businesses, jobs and tax revenues, it would encourage smuggling and other illegal activities in Pennsylvania,” he said.

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Tony Tortorici
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