Thursday, April 27 2006
California's Tobacco Tax Act of 2006 appears likely to qualify for the November 3 ballot in a state which is as hostile to tobacco as any in the nation.
If it passes, it will be a lot more so.
The act, crafted in part by health workers looking for money not available from the State Legislature thanks to California's massive debt, would put a $2.60-per-pack tax on cigarettes and a corresponding rise in tax rates on other tobacco products, effective January 1, 2007.
Charles Janigian, head of the California Association of Retail Tobacconists (CART) indicated that the likely "equivalent rate" for cigars would be at 135% of the wholesale price, not to mention a floor tax of about 88% of the wholesale to be imposed on all stock in inventory as of January 1. It could very well mean the death of many smokeshops in California, the national leader in cigar consumption.
The initiative requires 599,000 valid signatures from California voters to be placed on the ballot and Janigian indicated that canvassing for signatures had been concluded and that he expected the measure to be placed on the ballot.
He and other cigar-store groups are now forming in opposition to the measure, which will not have an identifying number until certified for the ballot. It's aimed at cigarettes, but the collateral damage to smokeshops will be enormous. Stay tuned.
Cigar imports into the U.S. slumped in February as shipments dropped by 29.1% compared to January. The big drop has been exports from the Dominican Republic, the largest cigar-producing nation in the world. In January, shipments to the U.S. lagged behind Nicaragua and for February, the Dominican fell to third behind Honduras (7.3 million) and Nicaragua (4.5 million) with only 4.3 million. For the year-to-date, exports from the Dominican are down 56.1%! In contrast, both Honduras (up 29%) and Nicaragua (up 43%) are starting out the year in style, even against solid years in 2005.
The mid-December raids on Miami-based counterfeiters were even larger than previously publicized. In an interview with the Miami Herald, Altadis U.S.A. boss Theo Folz noted that the counterfeit ring had sufficient packaging (boxes and labels) to flood the market with from 30 million to 50 million fake cigars! All this in a market which absorbed 321.6 million imports in 2005, so the counterfeits could have impacted 10% of the entire U.S. market in a single year! Both state and Federal charges have been levied at the counterfeiters and the first trials are expected in the middle of this year.
Short fillers: You find the strangest items at auction and a May 16 at Christie's in London will include a mid-1900s Ramon Allones giant perfecto measuring 28½ inches long! It comes in an individual cedar coffin with a snap closure and is expected to bring from $350-550 . . . Prometheus International introduced a substantial improvement to its Saturn lighter with its new Saturn Deuce, a twin-flame torch, available with or without a fold-out cigar scissors!
Cuban tourism officials projected a 7.7% increase in tourism for 2006, to about 2.5 million visitors. By comparison, the Los Angeles area alone welcomes about 25 million tourists annually.
- Rich Perelman in Los Angeles
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Heard in the Humidor is a publication of Perelman, Pioneer & Company.
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