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Proposed cigar tax increase angers small business owners

The house passed a bill that calls for a massive federal tax hike on tobacco. The tax could go up to $3.

That money would help fund a new federal program for children's healthcare.

Michael Baldwin enjoys cigars so much he's made a business of it in a small room of his house. Most of his cigars come from Nicaragua, Honduras and Dominican Republic.

Many of his customers range from cigar connoisseurs to people who enjoy a puff every once in a while. Baldwin says a cigar tax increase of $3 dollars a cigar could eliminate his business. "Actually this would completely put us out of business. There's no way we could absorb a $3 cigar tax,” said Baldwin.

Baldwin predicts it will put the whole industry under. "The Nicaraguans and Honduras are completely freaked out about it because you've got 10,000 employees in Nicaragua alone that work for these cigar manufacturers that have no other means of income that are gonna be completely out of business,” said Baldwin.

Will Bryson is vacationing from Greenville, South Carolina and enjoys a cigar every once in awhile. He says, "It surprised me at first cause I'm use to buying maybe a $5 and $6 cigar and I thought wow! $10 for something I normally pay $5 or $6 for. I'd probably change my mind about buying it."

US senator Lindsey Graham says he's all for helping children's healthcare. But this bill would cover adults and people in income levels beyond the original programs vision. "When you increase taxes on a product. Usually you consume less of it. So my question is, where will the money come from in the future if there is a reduction in smoking or cigar usage?” said Graham.

Baldwin says it's will force him to sell off his entire product.

Baldwin says he's passed out thousands of fliers to get people to sign a petition against the bill. He says a fairer tax would be from 25-cents to a dollar.

Source: South Carolina Now