Nebraska’s cigar tax could see some changes this legislative session as one bill seeks to more than triple it, while another seeks to place a cap on the existing tax.
LB 438, introduced by State Sen. Sara Howard, D-9, is pursuing an increase in the state’s tax on other tobacco products from 20 percent of the wholesale price to 65 percent with the revenues directed to the Behavioral Health Provider Rate Stabilization Fund, a new account that would be created should the bill pass. According to language in the bill, “the fund shall be used to support reimbursement of behavioral health services providers through provider rates within, but not limited to, the Children’s Health Insurance Program, the Medical Assistance Act, the Nebraska Behavioral Health Services Act, and the Nebraska Community Aging Services Act.”
For cigar smokers, the increase would mean that a cigar with a $9.50 suggested retail price would jump from $11.40 to $15.68 by halfwheel estimates, before any sales taxes are added.
The bill also seeks an increase in the state’s cigarette tax from 64 cents per pack to $2.14 per pack. Those additional revenues would also be directed to the Nebraska Health Care Cash Fund.
LB 190, introduced by State Sen. Bill Kintner, R-2, seeks to cap the tax on cigars, cheroots and stogies at 50 cents per unit, which would drop the cost of that cigar from $11.40 to $10.50 before sales taxes are added.
Both bills have been referred to the legislature’s revenue committee, where a 2016 bill to raise the tobacco tax from 20 to 31 percent was defeated.
The Nebraska legislature is also considering a proposal to raise the minimum age to purchase tobacco from 18 to 21-years-old.