Close, and It Is a Cigar

Thursday, September 23 2010

By DAVID KESMODEL | Wall Street Journal online

Sometimes a cigar is just a cigar. But sometimes, according to critics of the tobacco industry, it may be little more than a cigarette.

Last year, Congress sharply increased the federal excise tax on "little" cigars—filtered, often sweetly favored products that are similar in size and shape to cigarettes. Some manufacturers responded by increasing the weight of their little cigars so they qualified as conventional, "large" cigars, which are taxed at lower rates.

Now, a surge in sales of the small, inexpensive cigars is attracting the scrutiny of members of Congress and a prominent anti-smoking group, who say that tobacco manufacturers are exploiting this tax loophole.