Michigan Senate Approves Cap on Cigar Tax

A proposed permanent cap on the cigar tax in Michigan took a big step forward this week, as the Michigan State Senate gave its approval to HB 4485, a bill that will preserve the current 50-cent cap and save cigar smokers a good amount of money.

Currently, the state has a tax rate of 32.4 percent of the wholesale price on cigars, but ever since November 2012, a cap of 50 cents per cigar has been in place. In real-world terms, that meant that a cigar with an MSRP of $9.50 cost $10.50 at the register instead of $12.58 by halfwheel estimates, and using commonly practiced tax procedures. However, that cap was never permanent, and after several renewals, was set to sunset this month.

HB 4485, which was sponsored by Rep. Matt Hall, R-Marshall, was introduced in April and passed by the House of Representatives in May by an 83-25 vote with two representatives not voting. It had sat untouched over the summer, but was picked up on Tuesday and quickly ushered through the legislative process, passing the Senate by a 28-6 vote with two senators excused. It was passed without amendment and ordered to be enrolled the same day, which will send it to Gov. Gretchen Whitmer for her signature.