From the International Premium Cigar & Pipe Retailers Association (IPCPR)
Federal Legislative Update
Compromise Bill Moves Forward for Vote
Cigar Floor Stocks Tax Provision Removed
September 25, 2007-
A compromise bill for the State Children Health Insurance Program (SCHIP) funding was finalized late in the evening on Monday, September 24 with mixed news for the premium cigar and pipe industry. The Floor Stocks Tax provision on cigars that was originally in the legislation has been stricken. THERE IS NO FLOOR STOCKS TAX IN THE LEGISLATION!
However, the tax rate was reduced by only a fraction, from 53.12% to 52.988%, and the tax cap of $3 per cigar remains.
The compromised bill now goes to both the House of Representatives and the Senate for an up-or-down vote (members of Congress must vote either yes or no and no further amendments or changes may be added or made at this time.
Once the bill is most likely approved by both chambers of Congress, the legislation goes to the White House where President Bush remains adamant that he will veto the legislation. Following a presidential veto, Congress will most likely approve an extension of the current SCHIP program that expires September 30, relying on existing government healthcare money to fund the extension-the yet-to-be proposed extension will not rely on any tax increases. This extension will give Congress more time to create a bill that the president may be willing to sign.
Many have been involved in this fight, and we will continue working to protect members of our Association, notably Rocky Patel, Jeff Borysiewicz, a retailer from Corona Cigar, in Florida, David Berkebile, your association former president Lito Gomez of La Flor Dominicana, Marvin Samel of Drew Estate, Robert Levin of Ashton/Holt Distributors, Eric Newman of J.C. Newman, Alejandro Cuenca of Hoya de Nicaragua, and Jorge Padron. Due to the incredible efforts of these people the unfair treatment of the cigar industry was clearly brought to Congress' attention. Full, deserved credit goes to this group.
Though the comprise bill is far from what we need to protect our industry we have laid the groundwork for what may come at a later date regarding SCHIP funding relying on increased cigar taxes. We now have the tools in place to work toward a reasonable compromise on a livable tax.
IPCPR's federal lobbyists, Patton Boggs and Public Strategies-Washington, two premier lobby groups on Capitol Hill, and the Cigar Association of America have also been instrumental in this fight. Additionally, the manufacturing countries' governments are fully engaged through their embassies and continue lobbying their Washington, D.C. counterparts on the ramifications of this draconian tax increase, working toward our shared goals.
Thank you to all of you, our members, and your customers for the countless phone calls, emails, and faxes sent to your Congressmen and Senators. Congress now understands that the premium cigar and pipe industry will not stand idly by as they may have their way with our livelihoods and our industry. When this bill is vetoed, we look forward to working closely with Congress on a new bill that provides necessary healthcare funding for children while not driving an entire industry into extinction.
We will continue to keep you posted as this situation continues its legislative process.
Chris McCalla
Legislative Director