As part of an aggressive initiative to reduce smoking and tobacco use in New York City, Mayor Bill de Blasio has announced five legislative proposals, including one that would add on a new to tax premium cigars.
The proposal, known as INT-1544 and sponsored by Councilman Corey D. Johnson, seeks to raise the minimum price on a pack of cigarettes from $10.50 to $13, while smokeless tobacco and shisha packages would be set at $8 and $17, respectively. The cigar price floor would be calculated at a rate of $2 per cigar in a package, with a minimum of $8 per package. It would also tax cigars, little cigars, smokeless tobacco, tobacco-containing shisha, and loose tobacco at a rate of 10% of the minimum price.
That means that each cigar sold in New York City would have an additional 20 cents of tax added onto the cost, in addition to the state’s rate of 28.5 percent of the wholesale price. For a cigar with an MSRP of $9.50, the cost at the register would go from $12.21 to $12.61 by halfwheel estimates that uses common industry pricing practices.
Funds raised from the new tax, which are estimated to be $1 million per year, would be directed to public housing projects.
Additionally, the bill calls for a price floor of $8 on cigars, and would prohibit retailers from selling single cigars at a price lower than that.
In addition to the increased tax rate, Mayor de Blasio and members of the city council are seeking to reduce tobacco use in the city by reducing the number of tobacco retailers citywide by means of an attrition process; creating a retail license requirement for e-cigarettes and capping the number of e-cigarette retailers; requiring all residential buildings to create a smoking policy and disclosing it to both current and prospective tenants; and banning the sale of tobacco products at pharmacies.
The tax proposal has been referred to the council’s Committee on Health, of which Johnson is the chairman.