New Federal Tax on Cigars Proposed

Earlier today, four Senators announced the Tobacco Tax and Enforcement Reform Act (TTERA), which they claim will help combat the illegal tobacco trade and discourage underage tobacco consumption. For cigar smokers, it could mean higher-priced cigars.

Senators Richard Blumenthal, D-Conn.; Dick Durbin, D-Ill.; Jack Reed, D-R.I.; and Barbara Boxer, D-Calif., proposed new legislation that would increase the federal tax on cigarettes by 94 cents and “set tax rates for other tobacco products at an equivalent rate.” The International Premium Cigar and Pipe Retailers Association (IPCPR) estimates that rate to be 37.4 cents per cigar.

“This legislation is bad for American small business and continues the disturbing trend of excessive taxation on premium cigars,” said Kip Talley, senior director of legislative affairs for IPCPR, to halfwheel. “Unfortunately, many of these taxes are passed on to the consumers who simply want to enjoy a unique artisan product. IPCPR continues to monitor the legislation and will actively oppose its enactment into law.”

Because there is no definition of “premium cigars”—all cigars, regardless of size, filler or price—would be subject to this new tax. This tax would be in addition to the federal SCHIP tax imposed on cigars, which is 52.4 percent of their wholesale price capped at 40 cents per cigar. In total, the new taxes would likely add more than 77.4 cents to what the end consumer pays as the federal taxes are added to the wholesale cost of cigars for most retailers.

Given the Republican-controlled Senate, the bill is not expected to pass.

Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.