WATERLOO - Iowa's smokers are still feeling the sting of a $1 state tax hike per pack of cigarettes. Now a proposed federal law could leave a different group of smokers fuming.

The Children's Health Insurance Program Reauthorization Act of 2007, currently on the calendar in the United States senate, includes raising the federal excise tax on cigars, from a maximum of almost 5 cents per cigar to a cap of $10 per cigar. In other words, under the proposed law, a cigar which at one time cost $20 would likely be sold for $30.

John Eveland, owner of the National Cigar Store in downtown Waterloo, said the effects of the boost could be catastrophic to the niche industry. "This tax would be devastating to some of these big cigar companies," said Eveland.

The best-selling cigar at the National Cigar Store is the Padron 6000, a handmade Nicaraguan cigar that ranked in Cigar Aficionado's Top 25 list. While Padrons can range in cost, the 6000 series that Eveland sells retails for $7.50 a piece. Under the proposed legislation, the price would jump to $11 or $12 dollars each, said Eveland.

"Some people might quit smoking cigars altogether, or at least buy fewer than they did before," said Eveland.

According to Eveland, the increase in price could lead to increased smuggling of cigars across borders and possibly increase unauthorized, black market sales of the finely-wrapped tobacco products.

Jeff Miller, a sales representative for Woolverton Printing, is a regular cigar smoker, though he does not often dabble in the $20-plus cigar market. But even with a $5 cigar, the new tax would jump the price to $7 or $8 per cigar.

"I don't know that this new tax would make me quit, but I could certainly see myself cutting back," said Miller. "It's a nuisance. "They feel like they are going to raise extra money, but they are probably just going to waste it."

Eveland feels like the government is picking on a niche market, rather than attacking the problem of tobacco addiction. "Cigars are not addictive," said Eveland. "Unlike cigarettes and small cigars, such as Swisher Sweets or Black and Milds, most people do not inhale premium cigars."

It is unlikely that the proposed tax would cause people to roll their own cigars, but according to Eveland, that is exactly what happened with the cigarette industry after Iowa legislators boosted the state cigarette tax by $1 per pack in March.

"Since the cigarette tax was passed, I have seen a huge boost in sales of 'roll your own' cigarettes," said Eveland, who also sells his products online at www.rollyourown.com. "You can roll your own cigarettes for about $10.50 a carton compared to 48 or 50 bucks for retail cigarettes."

He said previous increases to the cigarette tax which were not as dramatic as the $1 increase had less effect on the industry. However, the wallet shock to smokers on the last round of taxes created a self-rolled cigarette phenomenon.

"Rolling" cigarettes is a somewhat generic reference, essentially meaning "do it yourself," as many customers use machines to inject their cigarettes with tobacco rather than actually rolling the tobacco in a paper. Injection machines are typically quicker than rolling, especially for smokers who desire a filter on their cigarettes.

Injectors can range from $10 for a plastic, hand-cranked contraption to several hundred for an speedy electric machine. They require empty tubes, usually with a choice of light or regular filters on the end, as well as a selection of tobacco.

Eveland said self-rolling has other advantages, such as the ability to select from a wide variety tobacco. He said his North Carolina tobacco has been National's best seller since the March tax hike, especially the additive-free and organic varieties.

"People who have switched to the additive-free tobacco have told me it tastes better and they cough less than with standard cigarettes like Marlboros and Camels," said Eveland.

This weekend Eveland and other tobacco retailers will flock to Retail Tobacco Dealers Association convention in Houston, where the cigar tax will likely be the main topic of conversation. But according to Eveland, industry insiders are convinced the law will never make it past the executive branch.

"I've talked to some people in the industry, and they told me even if the bill is passed by the House and the Senate, the President will veto it," said Eveland.

Contact Drew Andersen at (319) 291-1418 or drew.andersen@wcfcourier.com.