Quote:
Originally Posted by Beer Doctor
Correct me if I'm wrong (which I probably am). The cap is 40 cents per cigar. So If you buy a box of 20 cigars. The price will increase 8 bucks. A 100 dollar box will be 108 and a 500 dollar box will be 508. Meh. I'll still buy cigars. It sucks but I'll still buy.
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You not wrong except you forgot a couple things. The $8 is at the manufacturer level and they base profits off of percentages so when that profit is calcualted that must figure in the tax. If we only add 50% (low figure) your $8 is now $12, there is also the extra overhead from paperwork but that will be minimal. Next thing is your State OTP (other tobbaco products) tax which gets added on when the Cigars are landed in your state. It varies from state to state but here in Michigan it is 32% so we add that to the $12 which now becomes $15.84. From that point your local retailer must add his profit margin which is anywhere from 35% to 50% depending on how they do business so $15.84 + 35% = $21.38. And this is just to keep things the way they are, if the retailers or manufactires take less, the profit margins go down and they will eventually fade out of business. This is reality. The effect is much larger than we realize. Wait until the guys who only buy $25 bundles see their new price. It will only drive more folks to buy mail order and avoid the State OTP all together. Just my opinion, I could be wrong but my calculator tells me I am not, thanks for listening.
Mike