Massive Cigar Tax Hike Proposed in New Mexico

A new bill introduced in the New Mexico House of Representatives would dramatically increase the cost of cigars by more than tripling the tax on large cigars.

H.B. 33 would change the tax on large cigars from its current calculation, 25 percent of the wholesale price with a cap of 50 cents per cigar, to 77 percent of the wholesale price with no cap.

halfwheel estimates that a cigar with an MSRP of $9.50 likely retails, using normal cigar retail margins, for $10.50 before sales tax in New Mexico. If H.B. 33 were to go into effect, it would likely increase to $16.82. This represents a 60 percent increase.

For more expensive cigars, the effect would be even worse. A cigar with an MSRP of $14 likely retails for $15 currently, that could jump to an estimated $24.78 before sales tax after H.B. 33.

The bill doesn’t just dramatically increase the taxes on large cigars. New Mexico’s tax on cigarettes would double, pipe tobacco would be taxed at the 77 percent rate instead of the current rate of 25 percent, and the tax on e-cigarettes would increase six times from 50 cents to $3.50 per cartridge.

Rep. Joanne J. Ferrary, D-37, introduced H.B. 33.