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14-Sep-2007
New tax could smoke cigar store

Lighting up a hand-made cigar may make a smoker tense and nervous rather than relaxed if proposed federal tax increases are enacted.

Like cigar store owners across the country, Ken and Julie Neumann are asking Congress to put off what they label as "draconic and punitive" taxes that will threaten to put them out of business.

"We're already extremely overtaxed," said Neumann who along with his wife owns Cigars & More, 314 S. Milwaukee Ave., Libertyville.

"Like many cigar store owners across the country, we're a mom-and-pop business. It will eliminate consumption and hurt our business," he added, puffing anxiously.

A Senate bill would raise the tax 44 percent with a maximum of $3 per cigar. A more moderate House bill would increase the tax 33 percent with a $1 cap. Both bills passed their respective chambers. A compromise is expected to be reached, but the cigar industry is seething with anger just the same because taxes are headed higher anyway, according to Chris McCalla, spokesman of the 2,000-member International Premium Cigar & Pipe Retailers Association.

"It will double or triple the cost for consumers," he said of the taxes that are supposed to fund a controversial children's health insurance program.

The federal taxes are levelled at the manufacturing level, but consumers feel the pinch just the same at the retail level. On top of that, the state already imposes a total of 18 percent in taxes on the wholesale level.

Hand-made or hand-rolled cigars are increasingly preferred by smokers over machine-made cigars. They taste better and cost more.

"People are looking for quality products in cigars," said Neumann, a cigar smoker who grew up in Lake Forest and opened the store in 1998.

Previously, the couple owned Lady Pro, a maker of golf clubs for women.

Their store, with a lounge decorated to resemble a living room, is a haven for cigar smokers. It's expected to be more popular when smoking is banned at most public places -- but not cigar stores -- on Jan. 1 under a new Illinois law.

Typical cigar smokers are far from being rich. They are a mix of white and blue collars, and many of them are regular Joes, according to Neumann, whose store carries around 800 types and sizes of cigars, ranging from 99 cents to $35 each. The average price is $5 or $6.

"They are not the ultra-rich, driving fancy cars. Rather, they are the social equalizers," Neumann said.

To them, cigar smoking is part of a lifestyle and a way to relax. "It's unfair to tax them extra," he said.


Source: Waukegan News Sun