New York Governor Calls for Cigar Tax Cut

Premium cigars in New York could get a good bit cheaper in New York state if a tax change included in Gov. Andrew Cuomo’s proposed budget gets adopted.

The governor has proposed moving from a percentage of the wholesale cost to a flat tax of 45 cents per cigar. Currently, the state has a tax rate of 75 percent of the wholesale price, though an industry standard adjustment rate was put into place that reduces that number.

In the case of a cigar with a manufacturer’s suggested retail price of $9.50, the price at the register would drop from approximately $12.21 to $10.40 by halfwheel estimates.

Gov. Cuomo’s budget summary says that “the current tax structure, which is the result of litigation, has resulted in revenue losses and relies on an industry pricing survey to determine the tax on a product produced by the same industry.”

The budget must still go through the legislative approval process, so the tax cut may not come to reality. The state’s fiscal year starts on April 1, which is when the cut could go into effect.

Correction (April 10, 2017): The original version of this story identified the current estimated price of a cigar with an MSRP of $9.50 as being $10.93; it should be $12.21. We regret the error.