Ohio Moves Closer to Lower Cigar Taxes

A 50-cent cap on the cigar tax could become a reality in Ohio, as state legislators head into the home stretch of finalizing a budget that is due on June 30.

On Wednesday, the state Senate passed its version of the budget, which included the cap on the cigar tax. Currently, cigars sold in Ohio are subject to a tax of 17 percent of the wholesale price. For a cigar with an MSRP of $9.50, it means that the cost at the register is $11.12 by halfwheel estimates. Should the tax cap get approved, it would bring the cost down to $10.50, before any sales taxes are added.

The cap would result in a lower end cost for pretty much every cigar with an MSRP of $6 or more.

Before the cap can get implemented, however, the House and Senate will be holding a joint committee conference to resolve differences in the two chambers’ budgets before a final version is sent to Gov. John Kasich, who called for a significant tax hike on tobacco when he released his budget in February.

Kasich called for an increase in the tax rate on cigars and other tobacco products–excluding cigarettes–from 17 percent of the wholesale price to 69 percent of the wholesale price, though it would be capped at $2 per cigar. He also wanted to increase in the tax on cigarettes from $1.60 to $2.25 per pack and implement a new tax on e-cigarettes and other nicotine delivery devices, taxing them at the proposed 69 percent rate.