40 Percent Cigar Tax Proposal Returns in Pennsylvania

As expected, a proposed tax on cigars is back on the table in Pennsylvania.

Yesterday, 15 Democrats in the state senate introduced S.B. 13, which would raise a variety of taxes, including the introduction of a tax on cigars. Currently, Pennsylvania is one of four places in the U.S. without an excise tax on cigars, which has made it one of the country’s top cigar markets due to large number of catalog retailers, S.B. 13 would raise the tax to 40 percent of the wholesale price.

Earlier this year, the 40 percent was included as part of Gov. Tom Wolf’s proposed budget, but it along with a number of other controversial amendments led to the budget being defeated.

Yesterday, Republican leaders agreed to compromise on Wolf’s increase to public school aid—which is what S.B. 13 claims the tax revenue would go to—but indicated other issues still need to be worked out. It was the first time since June that any substantive progress on the budget had been made.

Major retailers like Atlantic Cigar, Cigars International, Famous Smoke Shop and Holt’s are all located in Pennsylvania due to the tax-free status.

In addition, the bill would raise the tax on cigarettes from $1.60 per pack to $2.60 per pack.