While the majority of the cigar industry was wrapping up the 2019 IPCPR Convention & Trade Show in Las Vegas, Nev., Maine Governor Janet Mills was signing a piece of legislation into effect that will more than double the state’s cigar tax while bringing all tobacco taxes into equivalence.
The bill, L.D. 1028, sought to make the tax on all tobacco products the same, meaning that cigarettes would be taxed at the same rate as cigars, pipe tobacco, and electronic cigarettes. For cigar smokers, that means that the tax rate goes from 20 percent of the wholesale price to 43 percent. In practical terms, that means that a cigar with an MSRP of $9.50 goes from $11.40 to $13.59, by halfwheel estimates.
Even though cigar smokers will be paying noticeably more at the register, it’s less of an increase than had been proposed by Rep. Joyce McCreight, D-Harpswell, who had initially proposed that the rate go to 81 percent of the wholesale price.
The rates remain flexible as well, meaning that should the tax on cigarettes go up, the tax rate on all other tobacco products would automatically go up as well.
The increases will go into effect on Jan. 2, 2020. Funds raised from the increase have been earmarked for tobacco cessation and prevention initiatives, as well as reimbursement for health care expenses as part of MaineCare, the state’s Medicaid program.