The prospect of ending trade restrictions with Cuba will be good for tax coffers as well as business, the owner of a Countryside cigar lounge said.
Sam Khalil, who owns Casa De Montecristo, said he welcomed the announcement Dec. 17 of efforts to normalize U.S. relations with Cuba.
“Easing a little bit of the restrictions is not great yet for business, but it’s a step in the right direction,” Khalil said. “When it’s truly free trade where we can conduct business with Cuba, that’s what we’re waiting to hear.”
Cuban cigars are highly sought after around the world because of where the tobacco is grown and its flavorful qualities.
“Cuba has volcanic soil, full of minerals, which adds flavor to the tobacco,” Khalil explained. “Cuban tobacco has a special essence to it and flavor a lot of customers inquire about.”
Although American firms are barred from importing Cuban cigars, millions of them enter the country illegally, he said.
“Cuba produces $400 million in cigars a year and 50 percent enter this country illegally. People buy online from Europe or China,” Khalil said. “On top of that, over $150 million are counterfeit Cubans coming into this country. This is all tax dollars we are losing.”
Various taxing bodies definitely stand to gain once the cigars can be imported legally. There’s an import fee of 40 cents per cigar, the 36 percent Illinois tax rate on tobacco products, a Cook County tobacco tax of 30 cents per cigar, and sales tax of 8.25 percent, Khalil noted.
“It’s a money generating product,” he said.
Additional U.S. taxes paid likely will be offset by lower shipping costs directly from Cuba, rather than costs to ship from Cuba to China or Europe and then to American consumers.
Khalil said prices for a Cuban cigar aren’t likely to be much different than what customers pay now for fine cigars imported from Nicaragua and the Dominican Republic at $10 to $15. The owner said his customers from Western Springs, Hinsdale, Burr Ridge and surrounding suburbs will look forward to an expanded selection.
The end of trade restrictions also will benefit the economies of Nicaragua and the Dominican Republic, where 30 percent of the workforce is employed in the cigar industry, he observed.
“This will allow them to mix tobacco, so it’s not just Cuba opening up opportunities,” Khalil said. “It will spice it up. There will be a taste and elements customers haven’t tried before. I don’t see a down side.”
The U.S. policy change also will help the Cuban people and their economy, which, in turn will benefit Americans, Khalil said.
“There’s a lot more Cuba has to offer than cigars. It’s a beautiful country for vacations only 90 miles from our shore,” he said. “There also are a lot of highly educated people, and we could learn from them and they from us for a trade of knowledge. I think it’s time.”