Cigar Shops Are Fuming Over Nebraska’s Tobacco Tax Proposal

A 225 percent increase in Nebraska excise taxes on certain tobacco products would be harmful to businesses throughout the state, according to the International Premium Cigar & Pipe Retailers Association.

Legislative Bill 436 calls for higher Richmond cigarette and smokeless tobacco tax increases and an increase in the excise tax on other tobacco products including all cigars. The bill would raise taxes from 20 percent to 65 percent of the wholesale price.


“Tax increases of this magnitude backfire in this or any other economy. They never produce what they are expected to produce and they always lead to damaged businesses, lost jobs and lower tax revenues overall,” said Chris McCalla, legislative director of the IPCPR.

In addition, higher taxes on tobacco products inevitably lead to lost revenues to the state’s cigar stores because customers either purchase less or they migrate to the Internet and purchase their products online where they are not taxed, McCalla pointed out. He also cited that higher prices lead to contraband product, brought in illegally and sold without generating state tax revenues.

“Nobody wins when that happens,” he said.

Earlier this year, anti-smoking forces touted the results of a poll of 500 Nebraskans as justification for tobacco tax increases statewide. At that time, the IPCPR branded the poll as ‘phony.’ The Robert Wood Johnson Foundation, an $8.4 billion organization that gets its funds from Johnson & Johnson, which makes the leading brand of anti-smoking medication, funded the poll.

“The conclusions drawn from the poll results are phony for many reasons,” McCalla added. “First of all, the poll’s funding source has a vested interest in forcing people to give up the pleasure of smoking which will result from higher tobacco taxes. Second, they are saying that 365 people should dictate higher taxes on those tobacco products by the citizens of Nebraska. Ridiculous!”

The IPCPR is an association of independent cigar storeowners and manufacturers, most of whom are small, mom-and-pop tobacconists who primarily sell premium cigars, pipes and tobacco.