Cigar smokers in Michigan won’t be seeing an increase in tax on their favorite cigars in the coming years, as Gov. Rick Snyder signed a five-year extension to the cap on cigar taxes yesterday, which will keep things as is through Oct. 31, 2021.
Currently, Michigan residents pay a tax of 50 cents per cigar, though that is the result of a cap passed in 2012 on the state’s rate of 32% of the wholesale price. When that cap was passed, however, it included a sunset date of Oct. 31, 2016.
The difference at the register can be significant: by halfwheel estimates, a cigar with an MSRP of $9.50 would cost $10.50 with the cap in place, while without the cap that same cigar would jump to $12.54.
The extension to the cap was introduced last fall by Sen. Wayne Schmidt and quickly passed through the Michigan State Senate by a vote of 38-0 on Dec. 10. On March 24, the bill passed the Michigan State House by a vote of 90-18, but not before a new sunset date was added. Schmidt had originally sought to extend the tax cap indefinitely, though a five-year extension was found to be more favorable to state representatives. The version they sent to the senate passed 36-0 with two senators excused.