Idaho Governor Signs 50 Cents Tax Cap for Cigars

Yesterday, Gov. Brad Little of Idaho signed into law H.B. 330, which will establish a cap of 50 cents for the excise taxes on cigars sold in Idaho.

The bill keeps into place the state’s existing 35 percent tax of the wholesale price for other tobacco products, which includes cigars, but limits the amount of taxes that can be charged to a single cigar at 50 cents. There is no “premium cigar” provision for this bill, meaning that all cigars will be eligible for the cigar tax cap.

It will go into effect on July 1, 2023.

Currently, a cigar that has an MSRP of $9.50 is charged $3.33 in excise taxes, which are then passed onto consumers. Beginning July 1—when the new law takes effect—that number will be capped at 50 cents. Any cigar with an MSRP of $2.89 or more is likely to see tax savings; the more expensive the cigar, the better the tax savings will be.

“This is a victory over eight years in the making,” said Paul Banducci, of The Racketeer in Post Falls, and Josh Evarts, of The Cigar Don in Meridian, in a press release issued by the Premium Cigar Association. “What began as one small family-owned shop in North Idaho pushing for economic fairness, has culminated in a strong network of shops, legislators, and customers across the state coalescing to achieve what, a decade ago seemed impossible. This adjustment in tax policy will make our local small businesses more competitive. Our partnership and line of communication with PCA, learning from the experience of other states, and steps such as the state saying there would be no adverse fiscal impact, collectively worked to make this happen. Our most sincere thanks to our legislative patrons and those that voted in favor, and to the Governor for his signature.”

H.B. 330 was one of at least two cigar tax cap bills introduced in the Idaho legislature this session. Another bill, S.B. 1108, also called for a 50 cents cigar tax cap.

“This was a textbook initiative of local shop owners, building upon their relationships with members of the legislature, making their case and ushering a bill through the process,” said Glynn Loope, director of state advocacy for PCA. “I had productive discussions and strategy calls with Idaho state senator Carl Bjerke, and PCA welcomed the opportunity to provide testimony, grassroots advocacy and research support. These local shops, though, made the difference.”