Up in smoke: Cigar taxes to hurt local businesses

Governor Patrick wants to raise state taxes on cigars.

Jetmira Kaziu is the COO of Cigar Masters, a cigar bar and lounge in the Back Bay. As a smoking bar, by law, at least 60 percent of its revenues must come from tobacco sales. Kaziu is worried that if the excise tax increase passes, she will feel like she’s stealing from her customers because they could easily get their favorite cigars cheaper elsewhere. Maintaining that 60-percent requirement would be difficult.
Glance: Cigars Taxes

“We are in between two states, New Hampshire, which doesn’t have any tax, and Rhode Island, which has just a 50-cents tax,” Kaziu said.

“So that means that all my customers, they’ll buy their regular cigars from the states next to us or probably go online and buy them, and as such we might even go out of business … and obviously the employees thrown out on the street in this economy is not such a viable thing to do.”

Joe Corrado, a 24-year old bartender, is a regular at Cigar Masters. He’s there a couple times a week, spending $30-50 a week, and he says if the excise tax hike passes, he would still most likely be a fixture in the bar, but his habits would change.

“Where I’m smoking $10 to $12 cigars now, I might bump down to the lower grades,” he said. “Or alternatively, I have aunts and uncles and friends that make frequent trips to New Hampshire, 40 minutes away or less, they make a day of it and stock up for the month.”

The governor acts as if the law of diminishing returns doesn't apply to state tax revenues.