Could cigar taxes reach $10?

Cigar smokers in New Hampshire and the rest of the country could be paying up to $10 more per stogie if a proposal to raise tobacco excise taxes is passed by Congress.

The proposed increase is part of a bipartisan proposal to reauthorize the State Children’s Health Program, which was presented to Congress earlier this week.

The proposal, authored by Senate Finance Committee members Max Baucus, D-Mont., Charles Grassley, R-Iowa, Jay Rockefeller. W. Va., and Orrin Hatch, R-Utah, calls for a 61-cent increase per pack of cigarettes — to $1 a pack — and an increase of 53.13 percent in the manufacturer’s or importer’s sale price of cigars, up to a maximum of $10 per cigar.

Taxes on cigars are currently capped at 4.8 cents per cigar.

The proposal also imposes a tax on floor stock, or inventory, held by a retailer as of Jan. 1, 2008.

“This could potentially drive a significant number of us out of business,” said Warren Shane, vice president of marketing and sales for Blowin’ Smoke on Route 101 in Bedford. “Any form of price increase puts us at risk. This will have a grave impact on the business.”

Concerns over the impact of what could potentially be a 2,000 percent tax increase on cigars go beyond the local market, Shane said.

“This is not just an issue for us — it’s a global issue. This is going to have the same impact across the nation. And what will happen to countries like the Dominican Republic or Puerto Rico, where more than 50 percent of their working population is involved in the cigar industry?”

Eric Kilbane, owner of Castro’s Back Room – which has shops in Concord, Nashua and Manchester — shares Shane’s concern, saying any tax increase will “not be good for business.”

Shop owners like Shane and Kilbane are doing what they can to inform their customers of the pending legislation and encouraging them to share their own concerns with their state representatives.

The current legislation is part of the $35 billion bipartisan proposal to continue SCHIP and increase its federal funding to $60 billion over the next five years.

The program was instituted in 1997 and is scheduled to expire on Sept. 30.

SCHIP subsidizes the cost of insurance for children and some adults with incomes too high to qualify for Medicaid coverage but too low to afford private insurance.

President Bush has vowed to veto the current proposal and is instead proposing a $5 billion increase over five years. – TRACIE STONE

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