‘Catastrophic’ Industry Failure Linked to Proposed Cigar Tax Increase

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The New York State Tobacconists Association and the International Premium Cigar & Pipe Retailers Association (IPCPR) are demanding that the proposed state tax increase to 90 percent on cigars and other tobacco products be voted down before the state loses more money and jobs because of what they say is another small business killer.

The New York State Tobacconists Association and the International Premium Cigar & Pipe Retailers Association (IPCPR) are demanding that the proposed state tax increase to 90 percent on cigars and other tobacco products be voted down before the state loses more money and jobs because of what they say is another small business killer.

Last year, the Federal government levied the highest tax increases in history on cigars and other tobacco products and, immediately thereafter, New York State approved its own increase on the same tobacco products from 37 percent to 46 percent. Now, Governor David Patterson is proposing to raise the OTP tax again, this time from 46 percent to 90 percent, claiming it would raise an additional $40 million in state revenues.

“That’s outrageous, ludicrous and potentially catastrophic. Already the 46 percent tax increase is resulting in lower tax revenues and several tobacco shops are closing while many others are failing. Raising that tax to 90 percent will drive the rest of us out of business, force our customers to buy out of state, over the Internet, or look for bootlegged products which are illegal. The bottom line is that the state will get even less revenues than before because of the lost business and lost jobs,” says Ron Melendi, a fourth generation tobacconist of Cuban descent.

Melendi’s group, the New York State Tobacconists Association, along with the IPCPR and other organizations representing small businesses, are fighting the proposed new tax increase.

Melendi runs De La Concha America, a tobacco store in Manhattan that has been at 1390 Avenue of the Americas for nearly 50 years. He has been a full-time professional tobacconist for 20 years. His group represents nearly 100 tobacconists statewide which translates into 1,500 neighborhood jobs throughout New York State that depend on the sale of cigars and other tobacco products.

“We’ve been writing letters, testifying, mobilizing our troops and meeting with state assembly and senate leadership. We also are appealing to smokers and non-smokers alike because what is happening makes no sense whatsoever. If they want to do what’s right, they will contact their elected state representatives to tell them to vote against this proposal,” said Melendi.

“A 90 percent tax will kill the premium tobacco industry in New York State. Some of our members are already leaving the state or are on the brink of failure. Our customers will go elsewhere for their cigars and pipe tobacco. New Jersey’s tax rate is 30 percent and Pennsylvania is one of the few states that does not tax cigars or pipe tobacco. Buying cigars from out-of-state mail order and Internet dealers results in no taxes for anyone. And it would also encourage illegal sales of bootlegged tobacco products. The result would be a decline in jobs and tax receipts for the state, not an increase,” said Chris McCalla, legislative director for the IPCPR.

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Tony Tortorici
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