Nobody can deny it. Big tobacco is really good at reading between the lines. In the newest legal loophole used by big tobacco, the federal government is reporting a tax loss of up to $1.1 billion thanks to the increasing popularity of pipes and cigars.
Pipe tobacco and cigars gained quite a bit of popularity from 2009 through 2011. One of the biggest reasons for its growing popularity is the fact that pipe/cigar tobacco is taxed at a much lower rate than pre-rolled cigarettes. With taxes ever increasing on tobacco products, savvy smokers have discovered that they can still get their fix but for a much cheaper price.
From 2009 to 2011 the government estimates that they lost anywhere from $615 million to $1.1 billion in tax revenues that could have been collected if pipe/cigar tobacco was taxed at the same rate as pre-rolled. ÃÂ The amount of pipe tobacco sold every month in the U.S. increased from 240,000 pounds in 2009 to over 3 million pounds in 2011. Furthermore, cigar sales have also skyrocketed from 411 pounds sold per month in 2009 to over 1 billion pounds per month in 2011.
This new data tells us two very important things. First, tax increases are noticed by smokers. They feel the pain of paying more per pack; so much so, in fact that theyÃ¢ÂÂre willing to switch their method of tobacco intake to make life easier on their collective wallets. Second and more troublesome, is that everyone making the switch to pipes and cigars has opted for an unfiltered form of smoking, which means they take in higher levels of dangerous chemicals found in tobacco.
Currently the Senate is working on legislation to level out the tax disparity but as with all political dealings, that could take a while.