A Michigan state representative has introduced a bill that would permanently extend the state’s 50-cent tax cap on premium cigars, which is currently set to expire in November.
Cigars have been exempted from the full brunt of the state’s tax rate of 32 percent of the wholesale price since November 2012. In terms of costs at the register, a cigar with an MSRP of $9.50 would cost $10.50 by halfwheel estimates, before any additional sales taxes were added. Without the cap, that same cigar would cost $12.54 by halfwheel estimates.
Extending the tax cap permanently, by way of removing a sunset date in the existing law, has been something that has been tried several times in recent years. It reached the desk of former Gov. Rick Snyder in 2018 who vetoed the legislation, after extending the sunset date by five years in 2016. In the 2020 session, a bill proposed to raise the cap to 65 cents and 75 cents in subsequent years, though that failed to advance in the House after being passed by the Senate.
The bill, HB 4485, was introduced by State Rep. Matt Hall, R-Marshall, and has been referred to the House Committee on Tax Policy for discussion.