OK So Im bit confused here. In regards to this tax as it affects cigars. I know it is .40 on each cigar. So I should feel a $20 increase on 50cabs. I was under the impression that this would be felt in my pocketbook at the shop, when I buy my smokes. So my confusion come from the talk of some brands like Tatuaje and Camacho not raising their prices due to the new tax. So is the tax hitting each cigar doubly? Why would a manufacturer feel the need to raise their prices if the tax is being paid by me at the point of sale? I would understand if a retailer had to raise their prices .40 in order to cover it. How many times can one item be affected by the same tax?
-
BOTL UPCOMING MAINTENANCE
Hi Everyone, as mentioned in my introduction post, BOTL needs quite a bit of updating, patching and whatever else I might come across. Over time BOTL may be unreachable on occasion as I do migrations or updates, etc. Just be patient - we'll be back! I'll generally try to keep these maintenances until later in the evenings.
Schip Confusion.....
- Thread starter dpricenator
- Start date
i believe the tax is being applied to the manufacturer, who is then going to raise prices to the retailers, who is then going to raise prices to the customer. that has been my understanding. i think people got confused because some manufacturers/retailers might have raised prices BEFORE the tax even went into effect. a few of my b&ms have stated that they won't raise any prices until they get their post april 1st orders on the floor (whereas one has raised prices the last week in march "in preparation".
all that said i could be TOTALLY wrong about the whole thing... haha. what a help i am.
all that said i could be TOTALLY wrong about the whole thing... haha. what a help i am.
yeah, as I understand it, manufacturers/distributors will be taxed, and that tax is passed on until somebody has the cojones to take the hit. So basically manfacturers will pass it on to us retailers and then we will pass it on to consumers. Anybody who has raised their prices on existing stock is an asshole, because it doesn't affect existing inventories of cigars (I believe).
TYLER
TYLER
njstone
BoM January 2010
The tax is applied to the manufacturer upon sale of the items. MOST manufacturers are passing that extra cost along (except Pete and some others).
Tats in a shop should NOT cost any more than they did a month ago...if someone tells you they do, they are lying and trying to scam off extra cash (unless their own state taxes also just want up, which has happened in some states).
Some manufacturers are increasing the prices even more than just the extra $.35 per cigar (there was already a $.05 tax before SCHIP). There have been stories of extra manufacturing and labor costs, etc. So many are just raising prices a bunch all at once (bad idea, imo).
On top of THAT, many shops are taking the opportunity to raise price even more than that...I've heard reports of prices increasing by as much as $2/stick in some shops! They tell people this is because of the new taxes...but that's obviously a bunch of crap. Even with a manufacturer that is raising prices a TON, plus new state taxes, you're not going to see a true-cost increase of even $1/stick, let alone $2.
But of course, a shop can charge whatever they want. For me, there are only 2 decent shops in town, one is far away from me and the other was already WAY overpriced. But it's all good, because I spent all my cigar money months ago anyway, and won't be buying more this year except maybe for a box-split on "The Drac"
Tats in a shop should NOT cost any more than they did a month ago...if someone tells you they do, they are lying and trying to scam off extra cash (unless their own state taxes also just want up, which has happened in some states).
Some manufacturers are increasing the prices even more than just the extra $.35 per cigar (there was already a $.05 tax before SCHIP). There have been stories of extra manufacturing and labor costs, etc. So many are just raising prices a bunch all at once (bad idea, imo).
On top of THAT, many shops are taking the opportunity to raise price even more than that...I've heard reports of prices increasing by as much as $2/stick in some shops! They tell people this is because of the new taxes...but that's obviously a bunch of crap. Even with a manufacturer that is raising prices a TON, plus new state taxes, you're not going to see a true-cost increase of even $1/stick, let alone $2.
But of course, a shop can charge whatever they want. For me, there are only 2 decent shops in town, one is far away from me and the other was already WAY overpriced. But it's all good, because I spent all my cigar money months ago anyway, and won't be buying more this year except maybe for a box-split on "The Drac"
Jfire
BoM 9/9' 9/11' 8/12'
Dave that is a hell of a good question.
I think my owner was scanning a bar code last day. I didnt ask but never seen him doing it before. I wonder if this was the schip amount. If it is how the hell can any manufacture be charging a increase. If it is this way there needs to be blood on the streets of cigar row. To blatantly do this to all the millions of cigar enthusiast is just plain wrong. I'm heading up in a hour and will ask him today but I think he may be off today.
Justin
I think my owner was scanning a bar code last day. I didnt ask but never seen him doing it before. I wonder if this was the schip amount. If it is how the hell can any manufacture be charging a increase. If it is this way there needs to be blood on the streets of cigar row. To blatantly do this to all the millions of cigar enthusiast is just plain wrong. I'm heading up in a hour and will ask him today but I think he may be off today.
Justin
The tax is an import tax as far as I understand. Thus the companies bringing in the cigar pay the tax. In most cases that increase in base cost will be passed on to the buyer (retailer) who will then pass it in to his buyer (us). For example cigar used to be sold by manufacturer for $2. Now applying only tax increase he will sell it for $2.35 (increase in the tax was from .05 to .40) to his buyer (retailer). Retailer will typically keystone his cost to keep his profit margin the same so he sells to his buyer (us) for $4.70. Before the tax he would have sold to his buyer (us) for $4.
Some manufacturers (or companies) are eating the tax increase themselves (Pete Johnson) and not increasing the cost to their buyer (retailer) so in theory the cost to the consumer should not go up. However I have already seen instances where shops are raising the prices across the board no matter what the product. In those instances they are making a greater profit off of sticks whose cost have not increased and taking advantage of the manufacturers who are eating the tax in an attempt to keep the final price of their products the same.
Retailers in theory could reduce their profit margin and only mark up the final price the cost increase to them, thus making the same profit in dollars but less in percentage. I hope all that made sense, and feel free to correct me if you have a better understanding but after reading much about this tax that is what I believe to be true.
Some manufacturers (or companies) are eating the tax increase themselves (Pete Johnson) and not increasing the cost to their buyer (retailer) so in theory the cost to the consumer should not go up. However I have already seen instances where shops are raising the prices across the board no matter what the product. In those instances they are making a greater profit off of sticks whose cost have not increased and taking advantage of the manufacturers who are eating the tax in an attempt to keep the final price of their products the same.
Retailers in theory could reduce their profit margin and only mark up the final price the cost increase to them, thus making the same profit in dollars but less in percentage. I hope all that made sense, and feel free to correct me if you have a better understanding but after reading much about this tax that is what I believe to be true.
Last edited:
I do know that Honduras has increased the wage for rollers in that country by 50% so there are some legitimate manufacturing cost increases.
Gummi Bear
Righteously Indignant
*pfm721 beat me to it*
My understanding of the tax, is that it is an excise tax.
When the manufacturer ships it to the US, it gets taxed at that point.
Then a distributor pays for them, and puts his markup on the cigar.
Then a retailer gets the cigar, and puts his markup on it.
A 40¢ tax, gets marked up twice before we see it, so it compounds.
My understanding of the tax, is that it is an excise tax.
When the manufacturer ships it to the US, it gets taxed at that point.
Then a distributor pays for them, and puts his markup on the cigar.
Then a retailer gets the cigar, and puts his markup on it.
A 40¢ tax, gets marked up twice before we see it, so it compounds.