Georgia Considers Cigar Tax Changes

Reports of cigar importers in Georgia going across state lines to buy product in tax-free Florida and then pocketing the tax they should be forwarding to the state has the Peach State’s senators looking at changes that could bring in a reported $15 million of lost revenue annually.

In a story originally reported by the Newnan Times-Herald, the state’s Department of Revenue testified that between 7 to 23 percent of tobacco sold in the state is not done according to the law. The main culprit for this is cigars, which are sold individually and do not come in packages that have to carry a tax stamp.

The testimony, which was made before the Tax Collection Technology Subcommittee of the Senate Finance Committee last week, cited vendors who bring in cigars from neighboring Florida and effectively pocket the tax that should be going to the state.

A number of lobbyists also testified before the subcommittee, with some calling for tax stamps on individual cigars and others calling for more auditors to track cigars brought into the state and those dodging the tax. Still others were calling for both measures to be put in place.

“To me it’s fine, because I pay my taxes. This levels the playing field,” said Mike Turrentine of Buckhead Cigar in Atlanta. He went on to say that when he pays his taxes, he sends a copy of all the invoices for the cigars he brought into the store during that period. As he understands it, the proposal could require all manufacturers to register with the state and then forward copies of those same invoices when they sell products to a retailer or distributor, giving the state a record of all the cigars that shipped.

According to the report, any change to the tax code would have to begin in the state’s House of Representatives, where anti-tobacco groups are hoping that a $1 increase in the cigarette tax could be tacked on as well. Georgia’s current cigar tax is 23% of the wholesale price of the cigar. There have been no reports of that changing as part of any proposed bill that would come from the testimony.