On July 19, 2007, the U.S. Senate Finance Committee passed legislation on a 17-4 vote to reauthorize and expand the State Children's Health Insurance Program (SCHIP) which includes significant increases in the federal tobacco tax rates. Here is a summary of the proposed tax rates (which include a floor tax for the difference between what has already been paid and what will be due for items that retailers have already purchased):

• Large cigars are taxed at the rate equal to 53.13 percent of the manufacturer’s or importer’s sales price but not more than $10.00 per cigar.
• Small cigars are taxed at the rate of $50.00 per thousand (the same rate applied to cigarettes).Pipe tobacco is taxed at the rate of $2.8126 per pound, and proportionately at that rate on all fractional parts of a pound.
• Snuff is taxed at the rate of $1.50 per pound, and proportionately at that rate on all fractional parts of a pound.
• Chewing tobacco is taxed at the rate of $0.50 per pound, and proportionately at that rate on all fractional parts of a pound.
• Roll-your-own tobacco is taxed at the rate of $8.9286 per pound, and proportionately at that rate on all fractional parts of a pound. The rate for roll-your-own tobacco is intended to approximate the rate for small cigarettes.
• Cigarette papers are taxed at the rate of $0.0313 for each 50 papers or fractional part.
• Cigarette tubes are taxed at the rate of $0.0626 for each 50 tubes or fractional part.
• Small cigarettes are taxed at the rate of $50.00 per thousand ($1.00 per pack).
• Large cigarettes are taxed at the rate of $104.9999 per thousand.

So, let's say the wholesale price on a cigar is $2, the tax on that cigar would be $1.06. For a $5 cigar, you are looking $2.66 in taxes. For a super premium cigar that has a wholesale cost of $20, the tax alone would be capped at $10. So now, a cigar that would have cost the consumer about $40 now will run $60! (assuming keystone pricing by the retailer)

This has GOT to stop!

I know I've blogged about this before but the time is coming close so keep the pressure up! I don't know if I could put it better. The folks over at CigarCyclopedia.com has posted the following to his mailing list:

You must act now!
The Finance Committee of the United States Senate is proposing an expansion of the State Children’s Health Insurance Program (SCHIP) solely through higher tobacco taxes that will have a draconian impact on the cigar industry.
Under the current proposal, the large cigar tax rate would increase 156.4% (from 20.719% to 53.13% of the manufacturer’s selling price) and the current tax cap of around $0.05 per cigar would increase an astounding 20,413% to $10 per cigar. All large cigars would effectively be taxed at 53.13% of the manufacturer’s selling price. In all of the Internal Revenue Code, no other product is subject to an excise tax that approaches this level. The little cigar tax would increase 2,635% – to $1,828 per 1,000 to $50 per 1,000. To compound the injury, a floor stocks tax would be assessed on all products in inventory.
The full Senate is expected to consider the legislation next week, but possibly sooner. We need you to act now and immediately contact your U.S. Senators. A consumer should only contact his own Senators because Senators are most responsive to their own constituents.
Call, fax or e-mail the offices of your own U.S. Senators, give them your name and address and ask that they vote to oppose the punitively high cigar tax increases in the State Children’s Health Insurance Program legislation.
Click here for a contact list of U.S. Senators with telephone numbers and electronic mail addresses. Every call counts, because almost all elected officials will open a new file on a matter if they receive 10 or more contacts of any kind.

Don't wait, act NOW!

Here is a posting from Lew Rothman on the CigarFamily.com website:

Everyone and I mean everyone that even smokes a cigar now and then has to be on alert for messages from all [bricks & mortar] smoke shops AND Internet vendors AND Manufacturers in the next few days regarding the proposed new tax on tobacco products:
“The Senate Finance Committee has scheduled a markup on Tuesday, July 17 on legislation dealing with the State Children's Health Insurance Program (SCHIP). The measure is expected to be reported out of committee. Funding would be almost totally via higher taxes on tobacco products. The cigarette tax will increase by $.61 to $1 per pack effective after December 31, 2007. Other tobacco products would be taxed as follows: large cigars – 53.13% of mfr's or importer's sales price but not more than $10.00 per cigar.”
In addition, there will be a floor stocks tax on tobacco products manufactured in the U.S. or imported into the U.S. which are removed before January 1, 2008 and held on that date for sale. The person holding the product on January 1, 2008 is liable for the tax to be paid on or before April 1, 2008.
YES! You read that right! $10.00 PER CIGAR, plus whatever your local state tax is. The people in Washington have absolutely no clue about the cigar business. Their sole focus is on cigarettes and we are about to get dragged along with it.
Not only will this put virtually every manufacturer, wholesaler, and retailer out of business, it will also devastate the economy of Nicaragua, Honduras, The Dominican Republic and have a significant impact on Puerto Rico, Indonesia, Costa Rica, Panama, Brasil, and Peru. (Whereupon, I’m sure the USA will be called upon to provide additional relief funding!).
You and everyone else who has any thoughts about continuing to smoke cigars or grow, sort, manufacture, distribute or retail cigars need to make a concerted phone, mail, and e-mail bombardment of Congress very shortly. Hopefully, someone more adept at interpreting this new tax law will supply the proper language for this protest.
Be ready and be vocal, and be outraged because this tax is definitely outrageous. It is my firm belief that if passed as it stands right now the entire industry will collapse prior to April 1, 2008 (appropriately named April Fools Day for the Fools we have running the government right now) because no one will have the finances to pay the tax on their inventory.