Cigars are about the only "luxury" items in which I indulge. I define luxury to mean unnecessary, overpriced, and pleasurable--so CDs, books, and beer (at least the kind of beer I buy) don't count. A month or so back, I noticed that the Near Eastern people who sell cigars to me had raised their prices for the third time in about a year. I made a point of politely telling them that the low-end high-end cigars--cheap ones found in humidors rather than behind 7-11 counters--they specialize in now were affixed with high-end prices outside of my affordability neighborhood. With the two other in-town tobacconists already out of price range, I reverted to the quick-smoking, often crumbly low-end brands that one finds in gas stations and convenience stores. Alas, they too had inflated in price. For instance, Swisher Sweets, which I used to purchase for $2 per five pack less than a decade ago, have more than tripled in price since. Garcia Vega Game cigars, which are quite good, go for nearly $7 per four pack.

It didn't dawn on me until reading this article that Uncle Sam, rather than Uncle Ibraheem, was responsible for the price hike (I served penance by purchasing three cigars yesterday from Uncle Ibraheem.). The federal cigar tax that I discussed months back passed, albeit in a more tempered form, and went into effect on April 1. Rather than the proposed $10 tax on individual cigars, the federal take is 40 cents. It's not as bad as it was in some cigar-hating crank congressman's imagination; it's not as good as it was before April Fool's Day.

If the tax increase kept me from low-end high-end cigars for several months, and led me to consciously partake in several cigar sobriety days each week, could it not have had a similar effect upon millions of other Americans? The closing of Tampa's Hav-a-Tampa cigar factory suggests an affirmative answer to that question.

"We can't afford to make these cigars in the U.S. anymore," Hav-a-Tampa's Denise Harrison told the Tampa Tribune. Well, not exactly, at least if you consider Puerto Rico--where Hav-a-Tampa will relocate--part of the United States. Like the beer that made Milwaukee famous shifting operations to Chicago, there is something seriously wrong with "Hav-a-Tampa, Made in Puerto Rico." About 500 Floridians, including one man who has worked at Hav-a-Tampa for fifty years, will lose jobs. Aside from the human costs, there are aesthetic costs to stripping a city known for cigars of its cigar industry. "We're the last of the Mohicans," Bobby Newman of J.C. Newman Cigar Company, Tampa's sole remaining cigar outfit, told the St. Petersburg Times. The Tampa Tribune piece notes employees pinning the blame on a number of factors, including bans on indoor cigar smoking and the recession. Special emphasis, however, is placed upon the tax hike from five to forty cents upon cigars that went into effect almost three months ago.

For people constantly talking about how interdependent the world is, politicians seem recklessly oblivious to the effects of their taxing and spending upon the economy. When the government bailed out Chrysler, Bear Stearns, and AIG, the water bilged over the side of those sinking ships sunk other less politically-connected companies. Tax funds used to bail out huge corporations came from taxes levied upon other corporations. One of those smaller companies drowning in excess taxation and regulation is Hav-a-Tampa. They are drowning in part because cigar smokers like me can less afford their product. To make matters so much worse, the government increases the price of cigars just when the size of our wallets decreases. Taxes effect my behavior, and my behavior contributes to the loss of jobs in Tampa. It isn't that hard to understand.

To make new revenue schemes politically palatable, elected officals rhetorically tethered the new taxes to spending programs packaged to maximize empathy. In the case of the cigar tax, the program nominally attached to it is the State Children's Health Insurance Program, which provides health care to low-income children, hence, the ubiquitous cry, "It's for the children." But what about the children of 500 Hav-a-Tampa employees? Sure, they can now apply for S-CHIP benefits. But their parents don't have jobs to put roofs over their heads or food in the bellies. Don't worry, there are government programs for all that too.

CS Lewis said that a tyrany exercised for the good of it's victims is the most opressive and that those who torment us for our own good won't stop because they torment us with the approval of their own conscience. Sound familiar?

AyC's are already made in Puerto Rico and Garcia Vegas in the Dominican Republic. Unfortunately, the best deals you get on cigars anymore are when the company that makes them goes out of business, but those are by definition one-shot specials yet I'm afraid indicative of the sort of "economic growth" we are going to experience in the economy as a whole.

“Should five per cent appear too small,
Be thankful I don’t take it all.” - Taxman

The unintended consequences of over taxing and over regulating the very people you depend on to support the system and then watching as that revenue evaporates is ludicrous.

This from today……

“CIGAR MANUFACTURER CLOSING TAMPA PLANT

Tampa will lose part of its cigar heritage in August when Hav-A-Tampa lays off about 495 employees and closes a factory that has been operating since 1902, says the Tampa Tribune.

Altadis USA, which owns Hav-A-Tampa, tried to keep the plant open by closing it for a week or two at a time and furloughing workers. Eventually, though, the company couldn't cope with a steep drop in consumer demand brought on by the recession and a large new tax on tobacco products.

Several things conspired to hurt Altadis' sales, says Richard McKenzie, senior vice president of human resources for Altadis, including the recession and the growth of indoor smoking bans:

• The bans have especially hurt sales in cold-weather states, where it's impractical to smoke a cigar outdoors in the winter.

• However, the company attributed much of its trouble to the State Children's Health Insurance Program, or SCHIP, a federal program that provides health insurance to low-income children; it's funded, in part, by a new federal tax on cigars and cigarettes.

• Previously, federal excise taxes on cigars were limited to no more than a nickel, but the tax, which took effect April 1, raises the maximum tax on cigars to about 40 cents.

• Before the tax increase was passed, the cigar industry warned that consumption of cigars could fall as much as 30 percent in the year after its passage.

• And these laws are pushing manufacturing overseas; work that had been done in Tampa will not be performed at an Altadis plant in Puerto Rico.

Dan,

Some time back you referred to "gulching." Many here in Graves County, including myself, have taken to growing burley tobacco for our own consumption. While my tobacco use is negligible, i intend to give this tobacco away to my friends and fellow smokers. After all, $3 worth of plants should yield enough for a light smoker for nearly a year.

This is being done not out of economic necessity, but these Kentuckians are tired of Uncle Sam taxing everything.

I am reminded of the Robin Williams Popeye movie. if you remember when Popeye steps off the boat the tax collector is there, quickly enumerating about 20 taxes, including "stepping off the boat" tax.

We will quickly pass Canada and Sweden in taxation within ten years, I believe.

Be well,

Sponge