Connecticut Budget Effectively Leaves Cigar Tax Unchanged

Connecticut has finally agreed to a new state budget and while it changes some language regarding how cigars are taxed, the result is likely most cigars will continue to pay a 50 cents per cigar tax.

The new budget does leave in place Connecticut’s cigar tax cap, which is the most important thing for consumers. Cigars will be taxed at 50 percent of their wholesale price, capped at no more than 50 cents per cigar.

However, it does include interesting language that could lower the tax rate:

Any tax imposed under this chapter shall be reduced by fifty percent for any product the Secretary of the United States Department of Health and Human Services determines to be a modified risk tobacco product pursuant to 21 USC 387k, as amended from time to time.

While the law could lower a tobacco products tax rate, it seems almost certain it won’t be a cigar. So far, there have been less than 40 products that applied for modified risk status from the U.S. Food & Drug Administration (FDA). None have been approved, though one is still being evaluated.

Even if a cigar were to find a way to qualify for the designation, it probably wouldn’t be priced in a manner where the tax was adjusted. It wouldn’t affect any cigar with an MSRP greater than $4.

There is a much greater chance that this could affect an e-cigarette-type product at some point in the future.