The state giveth and taketh away

In 2005 the Washington state legislature finally recognized that the OTP tax (other tobacco products which includes cigars and pipe tobacco but NOT cigarettes) of nearly 130% that was implemented in January 2002 was not bringing in the revenue they had expected. Over the previous three years since taking effect, a very large number of cigar smokers began buying their premium hand rolled cigars from other sources and not in WA state. Consumers purchased cigars on the internet, through mail order channels or neighboring states. In none of these instances did the state collect any tobacco tax from these purchases. Not only did WA state lose that tax revenue, the small business owner was also hurt as tobacconists saw their sales decrease and lost customers. These stores in turn paid less sales taxes, less tobacco taxes and less wages to the employees they could no longer afford.

In July the OTP tax was lowered to 75% of wholesale with a much more reasonable cap of 50 cents per cigar (stick) on premium cigars. Guess what happened? Cigar lovers came back to their neighborhood stores. Tobacconists purchased more cigars, consumers brought their money back to the state and business was on the road to being good again. The state of Washington was on a path to a healthy increase in tax revenue much like our neighbors to the south, Oregon. Since lowering their OTP tax in 2002, Oregon has enjoyed a substantial increase in tax revenue with no slowdown in sight.

Well, that was a short lived party wasn't it? With the new smoking ban in effect as of December 8, 2005, business is again down, not only at tobacco stores but at taverns, bars, bingo halls, etc. The increase in OTP tax revenue that the state imagined will not be there. Was it just a tease? Why lower the tax and then ban smoking? It's unfortunate that they didn't even have an entire year to realize the full effect of lowering the tax.

As with most states, Washington seems to always be running at a deficit and searching for revenue streams. The decrease in OTP tax was a good move and would have provided much needed funds in the state coffers. We'll never know now how good it could have been.

Of course with a few small changes like allowing smoking in cigar bars or tobacco shops perhaps a bit of that revenue could be salvaged.


Check out http://www.cigaradvisor.com/

Washington Smoking Ban Amendment Needed

Washington state's smoking ban as it currently stands is far too draconian. While I believe that it is reasonable to have a smoking ban in areas that are shared by all members of the public, I think that I-901 was far too extreme in its scope. I suggest the following two changes and return some appearance of reason to the smoking ban.

Allow smoking in dedicated Cigar Bars. No other state has gone so far as to ban cigar smoking in cigar bars. Establishments with physically separate cigar rooms and dedicated ventilation systems should be exempted from this ban. No non-smokers that I know of have any reason to enter a cigar shop or cigar bar, so their health is not being compromised. These venues are patronized only by cigar smokers with very little chance that any non-smoker would ever walk into one or be affected by them.

Allow smoking in Cigar Stores. Cigar stores should be exempted provided that the sale of OTP (other tobacco products which include premium cigars & pipe tobacco but NOT cigarettes) is their primary business. No other state has banned the consumption of cigars in the store that sells them. If a business owner cannot sample cigars or pipe tobacco in his own shop, how can he make proper business decisions with regard to what to purchase. No other state restricts the consumption of cigars to this degree and Washington should not either.

A cigar is a legal product and as such, there should be a place for a person to enjoy one if he or she so chooses. Cigars are not cigarettes and should not be regulated with the same disdain.

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