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New law
Imgembo
Posts: 661 ✭✭
Arkansas , the state which I currently reside, just passed a bill ( and gov signed into law)capping the tax on cigars at 50 cents. This means cigar prices in arkansas are going to drop.... A lot. Currently the tobacco tax in the state is 68% . So as you can see cigar enthusiast in this state have something to be excited for come October wgen prices start to fall . I can't wait!!!
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Lucky you.
Welcome to the forum, Dan! I hope you snag some good deals from ccom, and can save a little on that ridiculous tax!
the lower prices vs. their competitors prices will draw in new customers creating more profit.
the ones with the proposed line of thought will lose business to the ones with the better price shrinking profit. im fairly sure the above mentality wont last long if it does happen.
That's what happened in michigan...Some stores dropped, but the big BNMs kept their prices the same, or even increased them blaming it on a price increase from manufacturer...although the prices didnt change in any other state...
Depends on how many B&Ms there are in Arkansas. Lots? Or only a few?
On a side note, these two have some of the best staff in town. Just my 2 cents... well due to inflation that was a dime.
On the upside, W. Tennessee is right across the river from Arkansas, I may have to take a motorcycle ride over there and check things out!
"If you do not read the newspapers you're uninformed. If you do read the newspapers, you're misinformed." -- Mark Twain
Is that 68% on the sale price or the wholesale that the shop is paying? Sales tax is calculated on what the consumer pays. A lot of these other taxes are imposed on the business and on what the business is paying for the product. 18% of sales price is a whole different animal than 18% of retail.
Don't misunderstand I'm excited to see a state doing this, uber excited actually. However, lets not immediately start jumping on business owners that don't lower prices across the board. Profit margins vary widely in the world of cigars. There are all kinds of factors involved, is the shop buying directly from the manufacturer does he have to go through a wholesaler, etc, etc. Some cigars wholesale to MSRP has a much lower profit margin than others. There are cigars in every shop that the shop isn't actually making money on, but if they are bringing people in then ...
Say your favorite smoke is a Madurofan 5000 but your shop for whatever reason can't get it directly from the manufacturer and is buying it through a wholesaler and to stay competitve is pricing it at a point where in reality after expenses he's breaking even on it. Now lets say that new law goes into affect but the tax is on his wholesale price. That wholesale price is $4 for the sake of the argument, you're going to be angry that he didn't drop is $.72?
Now if they across the board don't lower any of their prices, that may be a little greedy. But in reality guys you're talking about an industry where very few proprietors are getting wealthy and if that tax is on wholesale you're talking about less than $1 on virtually every cigar. I know every penny matters, but when many of these shops are barely scraping by you really have a problem with a government regulation that actually allows a business more profit margin?
1,000
Congrats!
WV is 7% wholesale, but Im moving to KY where it's 15% wholesale... still not bad, but not exciting to pay double the tax either.
My guess is that this is exactly what will happen. For one thing, most casual smokers won't know that the taxes have gone down, so if the prices stay the same it won't make a difference. Another thing is that if a B&M is the only game in town and its already profitable it will have no incentive to lower prices. What may happen is that some B&M's that aren't particularly profitable may lower their prices to try to compete with online retailers or to lure in new customers. Although even with a lower tax I still can't see how B&M's can compete with C.com and other places. I never go into the one local B&M within a 15 mile radius of where I live because their prices are far higher than what the online places charge. Even if the taxes were lowered by a dollar and the place lowered their pries accordingly it will still be overpriced, compared to c.com and its brethrin.
Of course we all know what really will happen. Carpetbaggers will come in Arkansas and clean out B&M's stocks and the roll over the border into states with higher cigar taxes and sell them on the street. I'm thinkin' of flyin' down there and rentin' an Econoline van myself.