Georgetown Tobacco Imperiled by New Tax
To the Editor:
I am the owner of Georgetown Tobacco, a store I established in 1964 and now celebrating our 50th year. I would like to be in business for many more years. However, I and the owners of Curtis W. Draper established in 1880 and Signature cigars in Washington are faced with the most serious threat imagined.
In January of this year, the D.C. Tax Revision Commission approved tax reform measures “to increase fairness, broaden D.C.’s tax base, promote competitiveness, encourage business growth and simplify the tax code”.
As a result of the commissions recommendations, the D.C. Council has approved yesterday a tax of 7 million in option #5 of Bill B20 750. This 7 million was calculated out thin air as a line item guess but we are now faced with the reality that if this tax is finally approved at the June 11 District Council meeting, my company and the others small businesses would be forced to close our doors.
The tax raises all tobacco products to the level of cigarettes which is 80 percent of the wholesale cost, as an example, a cigar that retails for $5.00 in Washington will have to sell for $9.00, two-ounce package of pipe tobacco would increase the same along with all other tobacco products. In Virginia, there is a 10-percent tobacco products tax, and in Maryland it is 15 percent of the wholesale.
We are also faced with stiff competition from discount mail order firms across the nation, which offer many of the same products with no tax. In addition to the tax on sales the probability of a floor tax on products we now own could be beyond any of our abilities to pay. The tax, if finally approved, would go into effect Jan. 1, 2015, at the latest. Georgetown Tobacco and others like me will not be in business then.
-- David Berkebile, president of Georgetown Tobacco
Post script to editor, re: tobacco tax -- At press time it has been discovered that the tax exemption for premium cigars is back in the 2015 budget, and its removal was done by a drafting error. Therefore the 80-percent tax will apply to pipe tobacco, small premium cigars, cigarettes and rolling tobacco and snus. Georgetown Tobacco is hopeful that pipe tobacco and small premium cigars may be exempted as well for our customers of 50 years.