Cigar dealers sue city over tax

Wholesalers seek to block levy due to take effect July 1


June 26, 1999|By Gerard Shields | Gerard Shields,SUN STAFF

Nine cigar and wholesale tobacco companies in Maryland sued Baltimore yesterday to block a new cigar tax from taking effect July 1.

The suit challenges legislation passed by City Council in December that will impose a levy of 18 cents to 36 cents on each cigar sold by wholesale tobacco dealers in the city.

The bill originally targeted tobacco shops and pipe and chewing tobacco. Those businesses were cut from the measure after owners complained that the tax would wipe them out.

A provision in the city law repeals the cigar tax when a 30-cents-a-pack increase in the state's cigarette tax -- now 36 cents a pack -- kicks in next year.

Tobacco wholesalers say they want the city tax eliminated now because it conflicts with state law and pre-empts the changes due in state law next year.

The lawsuit, filed in Baltimore Circuit Court, also contends that the city has no authority to impose the tax on an industry regulated by the state.

"This is a prime example of a nuisance tax," said lawyer Bruce C. Bereano, who filed the suit on behalf of the companies.

The companies suing are: F. A. Davis & Sons Inc., A. Fader &

Sons Inc., George J. Falter Co. Inc., B. Green and Co. Inc., Triple C. Wholesalers Inc., Century Distributors Inc., United Drug Services Inc., BenLex Tobacco Shop and Max's Trading Co.

The cigar dealers participating in the suit say the tax will put them at an economic disadvan- tage with cigar sellers in surrounding counties.

"The consequences on the wholesale cigar sellers [are] significant," Bereano said.

The city solicitor's office could not be reached to comment yesterday. But supporters of the city tax, who pushed for the bill, said yesterday that they hope the city fights the suit in court.

"We'd certainly rather see it stay for a year," said Glenn E. Schneider, community organizer for the anti-tobacco coalition, Smoke Free Maryland. "This is just another attempt of the tobacco industry to bully the citizens of Baltimore."

Montgomery County passed a similar tax. Bereano said a similar suit will be filed against Montgomery next week.

Pub Date: 6/26/99

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