Tobacco Firms Save $1 Billion With Kitty Litter in Cigars (3/6/13)

Some tobacco companies are putting the type of clay used in cat litter into cigars to increase their weight, thereby allowing them to pay less tax, Bloomberg reports.

The tobacco firms are benefitting from a legal loophole that allows them to avoid paying as much as $1.1 billion in U.S. taxes, the article notes. In addition to the clay, they are stuffing cigars with more tobacco. Heavier cigars are spared the 2,653 percent increase in federal excise tax that affects small cigars. According to the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, 12 of the 22 companies that produced small cigars in the year before the new tax structure was created switched to or increased production of large cigars in the year following the law.

News Source: Bloomberg News