If there was ever time for a victory cigar to be lit up in New York, today is as good a day as any, as it came to light that a massive tax hike on cigars and other tobacco products has been stripped from the state’s budget proposal that was passed by the legislature late last week.
The change, which was said to bring in $12 million in FY2019 and $23 million annually thereafter, had been called for by Gov. Andrew Cuomo, but instead of simply calling for an increase to the state’s already high rate of 75 percent of the wholesale price, the language in the tax law would have been modified to change the definition of wholesale price on tobacco products such that it would now be defined as the invoice price for which the product is sold to a distributor.
That would in turn remove a provision that allowed what is called an industry standard adjustment ratio, and which effectively knocked down the rate from 75 percent to 28.5 percent. While still high, that meant that a cigar with an MSRP of $9.50 would have a register price of $12.21 instead of $16.63. The current tax structure will remain in place under the new budget.
The budget package has been sent to Gov. Cuomo for his signature, which is expected to happen in the coming days.