State Looks to Snuff out Tax Break on Little Cigars
Montage Tobacco Co. owner Mark Brier says there’s no denying little cigars have become an appealing alternative to cigarettes for smokers on a budget.
The 49-year-old Dunmore resident pulled a pack of Smokin’ Joes little cigars off a rack Thursday at his Davis Street shop and flipped it over to reveal the price: 89 cents. A pack of the least expensive cigarettes he sells sets a smoker back more than three bucks.
“It’s price. It’s strictly the price,” Mr. Brier said of the popularity of little cigars. “They’re not overtaking cigarettes by any means, but they are going.”
Wrapped in brown instead of white paper, little cigars are the same size as cigarettes, have filters like cigarettes and are sold in 20-cigar packs like cigarettes. The big difference is they are not taxed or regulated like cigarettes.
State officials across the nation want to change that.
The attorneys general of Pennsylvania and 39 other states have asked the federal government to close a loophole that allows the little smokes to be classified as cigars, arguing that — the brown wrapping aside — they are cigarettes in everything but name.
“In a nutshell, if it walks like a duck and it quacks like a duck, it’s a duck,” said Nils Frederiksen, spokesman for Pennsylvania Attorney General Tom Corbett.
As recently as four years ago, Mr. Brier said Montage Tobacco sold maybe one pack of little cigars for every 300 packs of cigarettes. Today, that ratio is one to 100. Over the same period, the little cigar varieties on sale at the shop have burgeoned, from fewer than 20 to more than 50.
Under current federal rules, tobacco manufacturers decide whether their product is a cigar or a cigarette. If it’s a cigar, it is not subject to the $1.35-a-pack tax or the public health restrictions Pennsylvania places on cigarettes, Mr Frederiksen said.
That’s only part of the concern, he said. Many little cigars are flavored, which combined with the low price — usually one-third to one-half the price of cigarettes — makes them appealing to young smokers.
“If you want to sell cigars, fine,” Mr. Frederiksen said. “If you want to wrap a cigarette in brown paper and call it a little cigar, that’s different.”
Steamtown Cigar Club on Spruce Street, which specializes in traditional hand-rolled cigars, doesn’t carry little cigars. Owner John Meyers agrees the small cigars are essentially cigarettes, but he’d still hate to see them taxed.
“My fear is once they start taxing that, they’ll start taxing everything,” Mr. Meyers said.
Mr. Brier said some of his little cigar customers prefer cigarettes because they are more flavorful, but they stick with the alternative smokes because they are cheaper. There’s no question in his mind what would happen to little cigars if they were taxed the same as cigarettes.
“They’d disappear,” he said. “They’d just disappear.”
