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SENATOR CAUGHT IN CIGAR DEBATE

Mel Martinez backs health insurance for kids, but not a tax hike to pay for it.

It sounds like a cinematic spoof: Sen. Mel Martinez meets the Cigar Monkey.

Florida's first-term Republican senator has been nudged front and center in a debate that hit the national stage last week: The proposed federal cigar tax that could raise the price of a premium smoke by as much as $10.

The Democratic-controlled Congress wants an extra $35-billion to reauthorize the state children's health insurance program. The program buys insurance for families not poor enough for Medicaid.

To pay the bill, Congress proposed using tobacco tax increases, mainly a 61-cent increase on a pack of cigarettes. Excise taxes on cigars would rise from a flat 5 cents to 53-percent of the manufacturer's or importer's price.

As a former secretary of Housing and Urban Development in the Bush administration, Martinez vows to back the children's insurance program. But he's also a politician wary of alienating a relatively modest but vocal industry in his home state.

Cigar factories and retailers employ more than 1,000 in Tampa at places such as the J.C. Newman Cigar Co. and Hav-a-Tampa. But it's Miami, with its large Cuban expatriate population, that controls about 90 percent of the $300-million premium cigar industry most threatened by the tax.

"He thinks this is an excessive tax. It's an undue punishment for a Florida industry," Martinez spokesman Ken Lundberg said Tuesday. "He likes the program, just not at the extreme level Democrats authorized."

Cigar-oriented Web sites organized by tobacco aficionados and retailers - cigarmonkey.com and clubstogie.com come to mind - have drafted form letters with which to bombard Martinez and his fellow senators.

Cigar smokers like Rush Limbaugh, the conservative radio talk show host, joined the chorus, as did the influential online news site Drudge Report.

"We've never seen this industry so unified before," said Norm Sharp, president of the Cigar Association of America.

Critics of the tax say cigar smoking, which they regard as a relatively harmless pastime, is under assault by the federal government. The maximum cigar tax allowed under the bill - $10 - represents a 20,000-percent increase over the current flat nickel tax.

"The whole thing is outrageous. It's insane. We just need to continue to get our story told," said Eric Newman, owner of a 100-year-old family business that make cigars from an Ybor City factory.

Bill sponsors estimate they could raise an extra $1-billion from cigar smokers over 5 years. It's that sort of static accounting that irritates Sharp.

A 53-percent tax would devastate the industry and force buyers onto the black market, Sharp said. In any case, the government won't get the revenue it's hoping for, he said, comparing it to a luxury tax on yachts abolished in the 1990s after millionaires stopped buying the boats.

The Senate Finance committee cleared the bill last week. The House of Representatives takes it up this week. Martinez's office predicts it will come up for a vote before the full Senate next week.

President Bush has vowed to veto the bill, less over the tobacco and more over philosophical objections to government buying health insurance for people eligible to buy it on the open market.

Martinez is among the GOP congressmen considering an alternative plan less reliant on tobacco taxes. Even Sharp admits that absent a Bush veto, it's hard to take on a bill that make effective use of the word "children" in its title.

"It's a popular program funded by an unpopular product,'' he said.

James Thorner can be reached at thorner@sptimes.com or (813) 226-3313.

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