New Mexico Governor Vetoes Cigar Tax Cap Removal

Taxes on cigars in New Mexico will not be increasing. On Friday, Gov. Michelle Lujan Grisham line-item vetoed language out of H.B. 547 that would have removed the state’s existing 50 cents tax cap for cigars. Had the language remained, the state’s OTP excise tax rate—25 percent of the wholesale price—would continue to apply to cigars, but there would be no limit on the amount charged. Instead, the current policy—25 percent of the wholesale price but no more than 50 cents per cigar—will apply.

If the language had remained, any cigar with an MSRP of $4 or more would have paid more taxes than before. For some context, a cigar with an MSRP of $9.50 pays the 50-cent maximum for cigars; had the language remained, that same cigar will be assessed $1.19 in excise taxes.

No reason was given why Grisham, a Democrat, vetoed the cigar language. She vetoed a wide range of proposals passed by the legislature including modifications to parole status, an increase in alcohol taxes and Smokey The Bear vanity plates.

A representative for the Cigar Association of America (CAA) told halfwheel the removal was the result of lobbying done by the organization. The Premium Cigar Association (PCA) put out its own statement highlighting a phone call made by Glynn Loope, director of state advocacy, to the governor’s office regarding the language.