Cigar tax cut draws opposition to State Capitol

ST. PAUL, Minn. -- A proposal to dramatically cut the tax on premium cigars in Minnesota drew anti-smoking advocates to the State Capitol Wednesday.

"We are a small business with real ties to our community, and we are part of the fabric that historic Grande Avenue in St. Paul," Mark Wolk, the owner of Stogies on Grand told members of House Tax Committee.

He said his tobacco store has been in the same spot for 18 years, catering to adults willing to pay more for premium cigars.

"Our store has never had an underage violation. We do not promote to young people, nor do we encourage that business."

Wolk said tobacconists in Minnesota are at a competitive disadvantage to surrounding states with lower taxes. The Minnesota premium cigar tax is 95 percent of the wholesale cost, up to $3.50 per cigar.

Wisconsin's tax on the same cigars is 50 cents.

"Each year our buying power diminishes, because, unlike other industries we have to pay the monthly tobacco tax before we sell our product," Wolk remarked.

Rep Jim Nash of Waconia is the chief author of the bill that would drop Minnesota's tax on premium cigars to 50 cents. It would also allow some machine-made cigars to be classified as premium. Under current law the term applies only to hand rolled cigars.

"All of the cigar stores I've been to are family owned cigar stores, and it's making it tough for them to get by," Rep. Nash said.

Proponents arrived at the committee meeting with a box of baked goods, but not everyone on the panel had a sweet response to the proposal.

"What we did, in terms of increasing the tax on tobacco products, including premium cigars did change behavior to the positive," Rep. Erik Simonson of Duluth told his colleagues.

"The revenue that we collect, even with the tax increase we put into place, doesn't begin to cover the cost to Minnesota taxpayers in terms of health care."

Opponents say dropping the tax, or even changing the definition of premium cigar, could make it easier for teens to start smoking.

"You might think kids won't smoke cigars. I'd like to ask you to think again," said Jack McNaney, a student at Cretin-Derham High School in St. Paul and a member of the Ramsey Tobacco Coalition.

"Young people model adult behaviors, in particular model the behavior of adults who appear powerful."

Hannah Simmons, a volunteer with the American Cancer Society, said she worries that the tax cut will make cigars more accessible to young smokers. She said there's also a concern that the bill may spark an influx of cheaper machine made cigars.

"I can definitely say from my own experience as a former smoker that we smoked whatever was the cheapest product out there," Simmons told KARE.

"If you make premium cigars cheaper, that's going to be the most easiest accessible product out there."

Rep. Nash said that good cigars are hard to smoke in a hurry, so he can't imagine the appeal to teens. He said anecdotal information he's received from school administrators and teachers is that students who do smoke are more likely to choose cigarettes.

The clock ran out in the hearing before lawmakers could take all the testimony Wednesday, so the tax committee will be back at it again Thursday.


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