Potential ways around the taxation?

[GeneralDisorder]

I was thinking.... how about the manufacturers lower the wholesale prices of the cigar itself down to the $1 range (thus a $0.53 federal tax under the proposed legislation), and charge $10 for the band (assuming a ~$10 cigar)? Is there law against this? Could it be called tax evasion? What about if the wholesaler isn't a US based corporation? I don't know of any laws that fix the price of tobacco products, nor do I know of any that say you *can't* lose money on one product in order to spur sales of another (ie: the bands).

A similar idea - charge for the box, and lower the price of the cigars - as in the case of those light-up crazy CAO humidor boxes.

What about home rolling? Just like the popular home brewing market - the major manufacturers could sell the leaf and the presses, tools, etc for us to roll our own - they could even age the tobacco first (possibly even age it already "blended"?) and thus avoid the tax entirely....

Some ideas anyway - might help for the short term till they can catch up with new laws. Ideas? Suggestions? Let's start thinking outside the box and stay one step ahead of the legislation - have to face it that tobacco is in declining favor with the public for now. That will change with time as it has many times in the history of the leaf, but for now we will have to deal with it. Prohibition didn't last, and neither will this - we just have to wait it out and outsmart them as best we can.

Rick

[Teninx]

That would work if the US Treasury was run by eBay. Sell the collectable packaging and give away the cigar.

[GeneralDisorder]

Originally Posted by Teninx

That would work if the US Treasury was run by eBay. Sell the collectable packaging and give away the cigar.

Well.... that was sort of my point. That there does exist unseen loopholes in this sort of thing. The fact that the people that wrote it are obviously completely ignorant of the cigar industry with their thinking that this tax is "proportional", and that the industry could even bear it without total collapse lends credence to my supposition that they haven't completely thought this through. A bit of trickery with the numbers might completely nullify it's affects, and it takes government a long time to turn around and notice that the cart isn't following the horse. It's also difficult when dealing with offshore companies - if they set the price at $1 - there really isn't much the US can do about it. And they can't really force them to sell the cigar separate from the band - you buy it as a package, and you pay $9 for the band, $1 for the cigar, and $0.53 in tax .

I really don't know about the legality of selling the bands, but I can't see how they could possibly tax home rolling under this legislation - it's a completely untapped market, and an explosion in that area would send the legislation right in the crapper - it could be just what is needed to create another "boom". People aready have this mindset from the Micro brewing and Home Brewing industry.

Rick

[GeneralDisorder]

Here's yet another thought:

The cigar companies set up retailer "networks" that the various retailers pay a monthly fee to be part of. They set up different levels of fees based on what level of cigars they wish to sell. Then lower the prices of all the cigars to the $1 to $5 range to mitigate the effects of the wholesale tax. THEN the retailer charges additional fees for those cigars in order to cover their "membership" costs with the wholesaler.

The cigars are cheap, and thus so is the tax, but the retailers pay a "merchandising" fee based on what they wish to sell. Lots of other industries have setups like this.....

Rick

[WyoBob]

Move the whole durn works to the reservation.

WyoBob

[GeneralDisorder]

Originally Posted by WyoBob

Move the whole durn works to the reservation.

WyoBob

Exactly

That's the kind of thinking we need - one step ahead.

We may not be able to beat them forever, but history shows that this sort of anti-tobacco campaigning only lasts for 20 years or so at a time - forever isn't the problem - NOW is.

This legislation is directly tied to the SCHIP, which will eventually be replaced with some other program, or some other source of funding when the tobacco industry is either drained or finds ways around paying.

We have to be quicker on our feet than the law makers. Think outside the box and make them fight for this tax money - but it can't be a straight fight - there are (sadly) more of them than us. So it's got to be fought on their terms - using their weapons. Paperwork, bean counting, and a generous portion of lies, deceit and manipulation.

Rick

[croatan]

Artificially setting prices for valueless goods sounds to me like a pretty darn good way to end up sharing a cell with the Smartest Guys in the Room.

[GeneralDisorder]

Originally Posted by croatan

Artificially setting prices for valueless goods sounds to me like a pretty darn good way to end up sharing a cell with the Smartest Guys in the Room.

Probably true - but they could be "collectible".....

That's not what I'm advocating (going to jail) - I'm saying the industry should bring the prices of all cigars down to a $1 to $5 level. If you can make a cigar that sells for $1, and you can make another cigar that sells for $20, then you *could* make all your cigars sell for $1. The profit calculations have to be changed and the products you sell must diversify. The "membership" game is an easy way to diversify the product line as you don't actually have to produce anything - you just have to control existing product flow - retailers pay membership fees to have the privilege of selling the existing hard product lines.... there's nothing illegal there - it's done in lots of industries.

Losing money on a product to spur sales in another area is done all the time - cigars are given away for FREE at Altadis web sites - Microsoft and Sony sell their video game consoles at a LOSS to spur sales of games and take market share.... etc.

Rick

[Teninx]

We can't beat the government with deception and trickery. They're much better at it, and have been practicing it longer.

[gefell]

Originally Posted by Teninx

We can't beat the government with deception and trickery. They're much better at it, and have been practicing it longer.

[floydpink]

I like the home rolling idea, but when it comes to box pressing, and perfectos, I might need some help or I'll have more seconds than Rocky Patel.

[LORD PUFFER]

Originally Posted by floydpink

I like the home rolling idea, but when it comes to box pressing, and perfectos, I might need some help or I'll have more seconds than Rocky Patel.

. Kind of like the U-Bake pizza places. Roll in shop.

[ResIpsa]

Originally Posted by croatan

Artificially setting prices for valueless goods sounds to me like a pretty darn good way to end up sharing a cell with the Smartest Guys in the Room.

Jails are filled with guys who thought they found a way to "beat" tax codes and all types of jail house lawyers, aren't they James?

[GeneralDisorder]

Originally Posted by Teninx

We can't beat the government with deception and trickery. They're much better at it, and have been practicing it longer.

I'm not saying we try to beat them - just stay one step ahead. Eventually the focus will go elsewhere. At least that's my theory. When the law passes (not saying it will, just postulating), we will be faced with a problem. How we deal with it determines if we win or lose. Fight the law - of course. But if we lose that battle we need a plan B. Defeatist attitudes aren't going to help - we need ideas. Maybe mine aren't the best options, but at least I'm trying? Maybe? I welcome any other discussion of options or ideas anyone here has that may help....

let's all think outside the box and outsmart these socialists that are taking our freedoms and pleasures. Change is the key - change so often they can't write laws fast enough to keep up and they will give up sooner than you think.

Rick

[Teninx]

I understand your frustration, and my 'trickery' comment was tounge-in-cheek....but we're not going to win the battle by advocating tax evasion. The manufacturers won't get away with avoiding the tax by selling the packaging unless the packaging is sold without the tobacco content. If a retail outlet sells the CAO Vision box after the cigars are sold, it won't be collecting tobacco tax on it because there isn't any tobacco in the box. If it sells the Vision box for $300. with free cigars included MAYBE that strategy would work, but the box would need seperate invoicing from the cigars, the boxes would have to ship empty and CAO would have to provide the cigars gratis after the boxes arrived.