Wednesday, July 18, 2007

Coming Soon: Offshore Tobacco Retailers

For the adventurous entrepreneur, the Democrat Congress opens a new door.

The Democrat controlled Congress has sought an extra $35-billion to $50-billion for the state children's health insurance program. The program distributes payments to the states to help buy coverage for kids not poor enough for Medicaid.

Cigarettes, which accounted for more than 95 percent of tobacco tax collections last year, are the main focus of the bill. Federal taxes on a pack would jump from 39 cents to $1.
But the legislation has dragged cigars along for the ride. The industry operates under a 4.8 cents-per-cigar tax cap.

Under the proposed bill, taxes on "large cigars," a category that includes all but the tiny cigars sold in 20 packs like cigarettes, would rise to 53 percent.

A U.S. Senate version of the bill under consideration today in the Finance Committee sets the maximum tax per cigar at $10.

So the Feds will add 61 cents/pack in costs, and the Wisconsin Wizards (Senate) would add another $1.00 or so.

All of a sudden, there's a marketplace for another Kennedy family-type business! A couple of boats, a few trucks, and voila! Profit potential in excess of $5 million/year in Wisconsin alone!

HT: Captain's Quarters

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