Pennsylvania - no state tax on cigars and smokeless tobacco products..

July 6, 2010 - Gov. Ed Rendell got some of what he was looking for in the $28.05 billion budget
but for the second year running, the Democratic governor was denied one of his key goals — bringing Pennsylvania into the ranks of 49 other states that impose a tax on cigars and smokeless tobacco products. He will leave office in January without having obtained it. (September 16, 2009 - Pennsylvania - Republican legislators still refuse to tax tobacco products other than cigarettes..)

"It's unfathomable," Rendell said recently of legislative opposition to the new taxes that, along with a planned dime-a-pack increase in cigarette taxes, would have been used to help close a $1.2 billion budget hole.

"Pennsylvania remains the only state in the nation without a tax on smokeless tobacco. It and Florida don't tax cigars. That makes public health a loser under the budget, said Melinda Little, a regional director for Washington D.C.-based Tobacco Free Kids. '"We know that higher taxes on these products prevent usage, especially with kids," Little said. The organization's figures show 12.9 percent of high school boys in Pennsylvania use snuff, 17.7 percent smoke cigars and 18 percent smoke cigarettes.' " (Winners and sore losers in the PA cigar tax defeat)

The distributors, Famous Smoke Shop in Forks Township, Cigars International in Bethlehem and tobacco giant the Altria Group, which has a presence in suburban Philadelphia, used one of Harrisburg's most time-honored levers — the threat of lost jobs — to build their case.

"We did our part to let our local state representatives and senators know that this type of tax would be detrimental to our business," said Michael Vandenstockt, marketing director for Famous Smoke Shop. Famous Smoke Shop, which does both mail-order and retail business, made it clear if the legislators passed the tax the company with its 70 jobs would move to another state. Many lawmakers — Democrats included — were also seemingly pathologically averse to passing tax hikes this budget season didn't hurt either.

Altria, the parent company of Montgomery County-based cigar and pipe tobacco manufacturer John Middleton Co., spent more than $125,000 on lobbying expenses during the first quarter of the year, state records showed. Altria spokesman David Sutton said the tobacco giant was pleased with the Legislature's decision to pass over the taxes this year.

Backers had hoped to raise as much as $104 million a year from the new taxes on cigars and smokeless tobacco products and the boosted cigarette tax. Deborah P. Brown, acting CEO of the American Lung Association of the Mid-Atlantic, said she was "extremely disappointed" that lawmakers had passed on the chance to raise $100 million when layoffs for state employees are looming.

Reference: Pennsylvania snuffs tobacco taxes for second straight year by John L. Micek, MORNING CALL HARRISBURG BUREAU, 7/5/2010.

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