Georgia Legislature Adjourns Without Changing Cigar Taxes

During its most recent legislative session, the Georgia Legislature had a pair of bills introduced seeking to change the state’s tobacco tax rate. While one sought to raise the rates and another sought to lower them, neither ended up making it out of the chamber.

H.B. 1229 was sponsored by five legislators, a bipartisan mix of four Democrats and one Republican, and sought to raise the tax rate on cigars from 29 percent of the wholesale price to 39 percent. In the case of a cigar with an MSRP of $9.50, that would have meant an increase at the register from $11.67 to $13.21. The bill made it to a second reading in the House of Representatives, but didn’t get to a committee hearing.

Another bill, H.B. 882, would have cut the tax rate on cigars by more than half, lowering it from 29 percent of the wholesale price to just 12 percent. That same cigar with an MSRP of $9.50 would have dropped from $11.67 to $10.64 had the bill passed. While it cleared the House by a 159-0 vote with 21 member either not voting or excused, it failed to make it to a final reading in the Senate.

Both bills contained other changes to the state’s tobacco taxes, including cigarettes, but one of the main issues in both was implementing an excise tax on e-cigarettes and vapor products, which are currently untaxed. The goal of taxing e-cigarettes was achieved by the passage of another bill, SB 375, which also raises the minimum age to purchase tobacco products, e-cigarettes and vaping products from 18 to 21-years-old. That bill includes an excise tax of five cents per fluid milliliter of consumable vapor products in a closed system, meaning a disposable container that is profiled by the manufacturer and not designed to be easily refilled, even if the vapor device is intended to be reused. A second excise tax of seven percent of the wholesale price would be implemented on open systems and vapor devices that contain any consumable vapor product at the time of sale.

SB 375 did not contain any changes to the state’s existing rates on cigars, cigarettes or other tobacco products.

It still needs to get the signature of Gov. Brian Kemp, with the Legislature sending it to him on June 29. If signed into law, the age increase would go into effect immediately, while the changes to alternative tobacco products would go into effect on Jan. 1, 2021.