October 28, 2008 – Next year’s Congress is expected to once again risk 20,000 U.S. jobs in some 3,500 neighborhood cigar stores in addition to nearly a quarter-million more jobs in three Central American countries as it attempts to fund expansion of a controversial children’s health care program with a significant tax increase on hand-rolled cigars.

“We don’t have anything against children’s healthcare programs like SCHIP – State Children’s Healthcare Insurance. However, ruining an entire business segment in the process of funding them makes no sense,” said Chris McCalla, legislative director of the Columbus, Georgia-based International Premium Cigar & Pipe Retailers Association whose 2,000 members would be expected to share in funding the program’s expected expansion.

”Any increase in taxes on hand-rolled cigars will seriously jeopardize small, family-owned businesses in this country and the livelihood of some 250,000 families in Nicaragua, Honduras, and Dominican Republic who depend on the production and sale of hand-crafted cigars for their primary source of income,” said McCalla.

Earlier this year, President Bush vetoed such legislation twice and Congress failed to override both vetoes. Congress is expected to take up the issue again next year.

“A $3 tax on the imported price of a cigar can multiply into a $6 to $8 price increase per cigar by the time it reaches the consumer. Such an increase will lead to horrific sales declines which, in turn, will result in failed businesses and lost jobs on several continents. Ironically, it also will result in significant shortfalls in the amount of money Congress expects to raise in the first place,” said McCalla.

“Hand-rolled cigars are different from other tobacco products,” McCalla explained. “They are more a hobby than a habit. They are an international symbol of celebration, socialization and satisfaction. Today, adults in all socio-economic categories are able to enjoy an occasional good cigar. Under the proposed legislation, such cigars would be virtually unaffordable to most consumers.”

McCalla also detailed the international ramifications to be expected if large, hand-crafted cigars would be subjected to the proposed draconian tax increases.

“There will be widespread negative economic and social impact on the developing countries that make cigars and grow cigar tobacco including the Dominican Republic, Honduras, Nicaragua, Mexico, the Bahamas, Ecuador, Columbia, Peru, Brazil, Panama, Costa Rica and Cameroon, Africa,” said Rowe. “Cigars and cigar tobacco are some of the largest exports from these countries. Ninety-five percent of their cigar exports are to the U.S. market. The unintended consequences of this legislation must be avoided,” said McCalla.