State legislators in Maine are considering a significant increase in the state’s tobacco tax, as a bill that is currently in committee hearings seeks to raise the tax rate on cigars, pipe tobacco and other tobacco intended for smoking from 20 percent of the wholesale cost to 47 percent.
For a premium cigar with an MSRP of $9.50, that means the cost at the register would go from $11.40 to $13.97 by halfwheel estimates, and before any sales taxes are added.
LD 1548, known as “An Act To Establish the Let’s Grow Maine Program,” was voted on in the Senate Taxation Committee on Thursday. While a formal committee report has not yet been issued, it is expected to be a divided report, meaning that committee members disagreed on a recommended action and multiple reports will be submitted for the legislature to consider.
If passed, the bill wouldn’t just fix the OTP tax rate at 47 percent; rather it would be tied to future increases in the tax rate for cigarettes. Half of the revenue generated from the tax would be used to fund a program to purchase fresh produce from in-state farmers that would be distributed to schools, senior citizens, and low income individuals by means of a public and private partnership in order to provide hunger relief.
The increase would go into effect on Jan. 1, 2018, should it pass the legislature and be signed by the governor.
Maine is also considering an increase in the minimum age to purchase tobacco products from 18 to 21 years old; that bill, LD 1170, was heard in the Senate Committee on Health and Human Services on May 1. A committee report has not yet been released, but it too is expected to have a divided report.