Jump to full article: Forbes, 2009-09-25
Intro: Pennsylvania is poised to maintain a long-standing tax exemption on the sales of cigars and smokeless tobacco, despite two attempts by Gov. Ed Rendell over the past three years to remove it.
Even though all other states tax the items, such a tax is not expected to appear in a nearly week-old budget agreement that is still being hammered into shape in the Capitol.
Earlier this year, Rendell proposed the tax to help wipe out the state's multibillion-dollar revenue shortfall. His attempt in 2007 would have helped underwrite an extension of state-subsidized health insurance to adults who lack coverage.
Resistance by Pennsylvania's legislators can be attributed to their desire to protect tobacco growers in southeastern Pennsylvania, cigar makers that employ hundreds and heavy use of snuff and chewing tobacco by miners and steelworkers in southwestern Pennsylvania.
"That would be a very unpopular tax in my communities," said Sen. Richard Kasunic, D-Fayette. "And I'd rather not have to vote on that."
In addition, Pennsylvania is home to four of the nation's eight leading cigar retailers. One, Cigars International of Bethlehem, would have to consider moving to Florida if Pennsylvania approved a tax on cigars, company president Keith Meier told the Senate Finance Committee at a February hearing on Rendell's proposal.
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