Tennessee has one of the lower tax rates on premium cigars and other tobacco products in the country, currently sitting at 6.6 percent of the wholesale price. However, a group of state legislators are looking to nearly triple that rate in an attempt to eliminate the tax on the sale of food for human consumption.
H.B. 1364 and S.B. 876 are hoping to increase the tax rate on cigars and other tobacco products to 17 percent. By halfwheel estimates, that would increase the cost of a cigar with an MSRP of $9.50 from $10.13 to $11.12, before sales taxes are added.
The bill also calls for an increase in the cigarette tax from 3.1 cents to 8.45 cents per cigarette, or $1.07 per pack.
The senate version passed on second consideration earlier this week and has been referred to the Senate Finance, Ways, and Means Committee. The house version passed first consideration and is currently awaiting further action.
Should the proposal pass, the increase would go into effect on July 1, 2017.