500 Cigar Jobs Weren't Created or Saved

"We can't afford to make these cigars in the U.S. anymore."

That sums up the plight of Tampa, Florida, based Hav-a-Tampa Cigars, a firm in production since 1902 is preparing to lay off nearly 500 workers and move its production runs to Puerto Rico.

Cause of death: higher federal taxes brought about by SCHIP.

Altadis tried to keep the plant open by closing it for a week or two at a time and furloughing workers. Eventually, though, the company couldn't cope with a steep drop in consumer demand, brought on by the recession and a large new tax on tobacco products, McKenzie said.

Work that had been done in Tampa will now be performed in an Altadis plant in Puerto Rico, where it has extra manufacturing capacity, McKenzie said. The company is not closing its nearby distribution center off U.S. 301, where it employs about 150 people.

Employees on Tuesday were digesting how they would find work in an economy where more than one in 10 people in the area already are unemployed.

[SNIP]

Several things conspired to hurt Altadis' sales, McKenzie said, including the recession and the growth of indoor smoking bans. The bans have especially hurt sales in cold-weather states, where it's impractical to smoke a cigar outdoors in the winter, he said.

However, the company attributed much of its trouble to the State Children's Health Insurance Program, or SCHIP, a federal program that provides health insurance to low-income children. It is funded, in part, by a new federal tax on cigars and cigarettes. McKenzie couldn't say how much sales of Hav-A-Tampa cigars had fallen off, but the numbers have dropped significantly, he said.

Previously, federal excise taxes on cigars were limited to no more than a nickel, said Norman Sharp, president of the Cigar Association of America trade group. The tax increase, which took effect April 1, raises the maximum tax on cigars to about 40 cents, Sharp said.

The "logic" -- a word our president likes to use -- of financing a health insurance program for "children" using taxes on vice has never been real clear.

But that's logic of progressives who once upon a time brought us Prohibition. That went over real well too.