Posted on 05/21/2002 6:27:48 AM PDT by Phantom Lord
Two cigar stores snuffed out
A hike in the state cigar tax has caused the owners of at least two cigar stores to say they are closing their doors by July 2 when the new tax goes into effect. Both Stogie Bros. in Buffalo and Smokin Flamingo in Clarence say the tax going from 20 percent to 37 percent on the wholesale price of a cigar makes it impossible for them to compete with cigar catalogs, Internet sites and Indian reservations that pay no tax.
"It gets to a point where it's not worth swimming uphill," said Rick Fickhesen, owner of Stogie Bros. on Franklin Street, across from the convention center. "The state isn't a tax friendly state or business friendly state. As long as they try to tax their way into prosperity people will leave."
Stogie Bros. is the last cigar store in downtown Buffalo. Wings of the World Cigar Adventure, which had been in the Hyatt Regency Buffalo since 1997, closed May 1 because of the drop in hotel occupancy at the Hyatt due to the decrease in travel since the Sept. 11 terrorist attacks, said former store manager Len Hoeglmeier.
State lawmakers initially considered raising the cigar tax to 54 percent of the wholesale price, but intense lobbying resulted in a 37 percent cigar tax. New York State currently gets about $21 million a year from the 20-percent tax and expects to get an additional $15 million from raising it to 37 percent.
Cigar store owners wonder if the state will get much additional revenue because they believe the higher taxes will give their customers additional incentives to avoid taxes by buying from catalogs, the Internet or Indian reservations.
Because of the taxes in New York State, Larry Leibowitz buys his boxed cigars from catalogs, but likes stopping by Stogie Bros. to sample new cigars or buy accessories such as the lighter he purchased Monday.
"The taxes are so high in New York," said Leibowitz, manager of Infinity Broadcasting in Buffalo. "It's just going to drive more business away."
If a box of cigars cost Fickhesen $100, he might sell the box for $180 in his store. A catalog might sell the same box for $160 so he would match the price to keep a customer. After paying $20 in tax, he makes $40. With the new tax at 37 percent, his profit would drop to $23.
Fickhesen says he makes about $30,000 a year from running the shop now, but can't afford to support his wife and four kids on the slimmer margins that the tax increase will cause. He hopes someone might want to buy the store and its inventory.
Earl and Louis Schultz, who own and operate Smokin Flamingo, are also closing by the end of June.
"Everybody outside New York State has a 45 percent advantage," said Earl Schultz, who opened the store on Main Street across from the state police barracks four years ago. "People won't smoke less. They'll buy their cigars some place else."
Adding to their troubles is that fact that Main Street is undergoing reconstruction, reducing customer traffic to a trickle.
"This tax increase couldn't have come at a worst time," Schultz said. "You add all these things up and New York State has made it very, very difficult to do business."
Even cigar stores that will remain open such as the Tinder Box in Amherst are holding sales to reduce their inventory before the tax increase takes effect July 2. In addition to stores paying 37 percent on any new cigars they buy, stores must also pay the difference between the old and new tax rate on any cigars they have in stock.
With an inventory worth $100,000, the Tinder Box would have to pay $17,000 in taxes, said owner Steve Dvorak. He plans to reduce his inventory to between $30,000 and $40,000 by giving customers 20 percent off any box of cigars and selling some of his inventory to Tinder Box franchises in other states. Dvorak gets his 20 percent tax back on any cigars he ships out of state.
After the 37 percent tax on the wholesale price goes into effect, Dvorak says he'll have to raise his retail prices by 8.5 percent to 10 percent.
"The guys who buy a couple of cigars for the golf course will still stop in," he said, "But the serious smokers, we may lose the box sales."
What about those of us who don't eat greasy cheeseburgers? Or those that don't have 18 year old kids wrapping their cars around trees. Or those of us who aren't having promiscuous sex with anything that moves? Who's paying their bills?
It's been proven that cigarette smokers are less of a burden on the health care system. They live fast and die young. While the non-smokers go on to live till 95 with every conceivable geriatric disease.
Leave me and my cigars alone.
Bummer....
November 6, 1998
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I think I see the problem. Upstream is easier.
You are waaaay off the mark, Canada has a population of 30 million, 25% smoke, the government takes 10 billion and counting dollars pr year out of smokers pockets, WE ARE PAYING OUR OWN HEALTHCARE, and then some.
And the baby-boomer generation (the biggest increase in humanity in Western history) managed to occur with approximately 80% of the male population smoking.
Hmmmm, and this happend how, exactly?
Didn't it ever occur to you that the Baby Boom, the single era of highest birthrate in the country's history, was created by the smokingest generation that has ever lived? (I want to see you tell an 18-year-old-boy that his smoking makes him impotent and watch him laugh in your face.)
BTW, since it's obvious you'll believe anything, when you're through throwing out your alleged "facts" about smokers, I have a bridge to sell...
In Germany, the Nazis first came for the Communists, and I didn’t speak up because I wasn’t a Communist. Then they came for the Jews, and I didn’t speak up because I wasn’t.a Jew. Then they came for the trade unionists, and I didn’t speak up because I wasn’t a trade unionist. Then they came for the Catholics, but I didn’t speak up because I was a Protestant. Then they came for me, and by that time there was no one left to speak for me.
Martin Niemoeller
Patently untrue. I'm sure it seems that way to you since you obviously have an axe to grind, but if you're honest enough to track down the truth, you'll find that about 25% of those patients are smokers, approximately the same percentage as smokers in the population. According to the CDC's own figures (not on their anti-smoker pages, but elsewhere on the site), 75% of cancers and 85% of heart disease are in nonsmokers.
Deny you the right to smoke? I wouldn't vote for it. ...Make you pay more for your health care based on that? Yep.
And if smokers already pay more into the system than they'll ever use, unlike the obese, those who indulge in alcohol, extreme sports, or sedentary lifestyles? What do you consider fair then? Or is this punitive taxation only for those nasty smokers who DARE defy the common wisdom?
Snicker...I'm sure somewhere in a smokers "rights" group someone has posted a "TRUTH" like this. And I'm sure some people believe it!
Elvis is alive. May I suggest you get a Tin Foil Hat.
Why not if its ok to do to smokers?
You better dig in your heels and don your asbestos skivvies. You are about to get a flaming like you've never had before.
But to date, there is NO evidence that 2nd hand smoke kills people. None.
And the WHO report didnt say that it was a benefit to everyone, but for seniors there were benefits to it that help to fend of old age diseases such as alzhiemers. Why that is, I have no idea.
Here is a question for you. Who do you think is more addicted to tobacco. Smokers, or government?
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