Enjoying a cigar in Buffalo has recently gotten more expensive. In June of 2010, New York State enacted a 63% tax hike on tobacco products, including cigars, to address it's out-of-control budget deficit. Now, 75% of the wholesale price of a cigar goes to the Empire State's tax collector.
The politicians in Albany estimate the revenue generated from these increases will result in 500 million additional dollars for the government. Opposition lobbyists point out that cigar smokers will simply take their business elsewhere, such as online tobacco outlets and neighboring states with less punitive tax initiatives, and it will be small businesses which suffer most.
Buffalo cigar smokers benefit from additional, but perhaps temporary, retail sources. Nearby Native American reservations have profited handsomely from the sale of tobacco products to the smoking public, due largely to their immunity from state taxes, and the lower price they can then offer to smokers. With New York's looming financial problems, the efforts to impose taxes on tobacco products sold by Native American outlets to non-Native American smokers have grown in intensity, and will likely be forced by the new governor. Once enacted and enforced, Native American tobacco retailers will lose their competitive advantage and will have to charge New York State tobacco taxes to any non-native purchasing their products. The issue of soverignty has been hotly contested in New York State Supreme Court, but many believe the state will prevail in its bid for assessing these tobacco taxes.
Local Buffalo tobacconists such as the Virgil Avenue Tobacconists and Nice Ash Cigars are having an increasingly difficult time competing with online purveyors and tax-favored outlets as New York State turns increasingly to smokers for additional revenue. These tax hikes bring the retail prices for cigars to a prohibitive point, and hurt local businesses that have a long-established presence in Buffalo's economy. A significant drop in sales, some as high as 60%, have been reported by cigar retailers, and there is no relief in sight.
As state spending continues to increase and budget deficits make government more desperate for revenue sources, the average cigar smoker in Buffalo will likely need to become more creative in finding reasonably priced premium cigars.