Sunday, August 05 2007
As usual, this year's Retail Tobacco Dealers Association started off with the traditional breakfast meeting, but the vibe in the room was not as upbeat as in past years. Presided over by outgoing President, David Berkebile, the first order of business was announcing that the organization will be changing its name from RTDA to IPCPR, the International Premium Cigar & Pipe Retailers. The name change was made to clearly distinguish manufacturers and retailers of premium cigars and pipes from those in the cigarette industry.
All of this ties into the primary concern of all the attendees, which is the current proposed federal SCHIP legislation, which could raise the tax on cigars to levels high enough to put the industry out of business. At this writing, both the House and the Senate have passed the bill, with a slight reduction in the tax increase. (It looks like the calls and email did have some effect on a number of representatives.) Even though President Bush is expected to veto the bill, the House and Senate will try to re-work the legislation before it goes to the president to avoid a veto. If so, that would mean at least some significant tax increase, which could also include a floor tax. Fortunately, the Senate version of the bill does not have a floor tax.
Another tactic the RTDA is taking to combat legislation is the hiring of a public relations firm. According to Executive Director Joseph Rowe, the campaign will help make those in office and the public gain greater consumer acceptance and appreciation for the handmade premium cigar industry as a whole. By raising the reputation of those who work in the trade, they hope to "change the perception" of our specific industry.
Of course those who are opposed to tobacco - period, probably aren't going to buy any PR sales pitch, but we are in a very specialized industry, and as Rocky Patel, who among others, has been spearheading fight pointed out, "there is a tax distinction between wine and spirits." The same should hold true to for cigars and cigarettes.
I have been saying all along that it is because of the cigarette smokers that cigar smokers get lumped in by association, so our products are forced to suffer as well. And this latest move on the part of the federal government has really stirred up ire throughout the entire industry.
As Arthur Zaretsky, president of Famous Smoke Shop, Inc. pointed out, "This is the first time that all of us, including the factories and their workers in Central America, are affected by one piece of legislation."
Rocky Patel also pointed out that if passed, the legislation could violate the CAFTA (Central American Free Trade Agreement). Apparently the treaty prevents the taxation on goods that are produced in such countries as The Dominican Republic, Nicaragua, and Honduras.
Later in the day, a second meeting was held to follow-up on the tax issue. Several speakers addressed the floor including Dr. Alejandro Martinez of Joya de Nicaragua cigars, and one who is closely involved with CAFTA.
"This is a catastrophe," Dr. Martinez said. "The tax could have a devastating effect on up to 700,000 workers in Central America." Then there are the millions of others in these countries who depend on the workers for their own businesses, etc. "We need to get cigars excluded from such legislation altogether," he added.
Following Dr. Martinez was a former maritime lobbyist who pointed out that with the summer vacation commencing this week, all of your representatives will be home. He also had more cogent advice. Now is the time to hit them hard. Letter writing and calls will only get you so far. You need to get to them personally if you can, or to their Chief of Staff. Try to get a meeting. Talk to the highest person connected with your representatives. The votes were not so far apart in the Senate and the House, so it is very possible to bring them together on this issue and kill it. But it will take networking. If you 0r someone you know can get to that key person, do it. If you have to spend a couple of hundred dollars to attend a dinner and get that representative's ear for five minutes, it will be the best investment you can make. Start finding out who they are and keep at them because in September, they'll be back in Washington.
We can beat this thing, but we all have to row together in unison. That may even include forming coalitions in every state where competitors would have to lay down their arms and work together. Remember, we're all in this one together. £
~ Gary Korb
