Oregon House Threatening State’s Cigar Tax Cap (Update)

Later today, an committee in the Oregon House of Representatives is expected to vote on S.B. 925-A4, a new measure that would increase taxes on a variety of things in the state, including premium cigars.

The overall vote will be over extending tax credits, which need to be renewed every six years, but for cigar smokers, it could mean a drastic increase in the price of cigars. Currently, cigars are taxed at 65 percent of the wholesale price, capped at 50 cents.

The proposed legislation calls for removing the cap.

If the cap was removed, it would likely increase the cost of every cigar that has a suggested retail price (SRP) greater than around $1.50. Currently, a cigar that has a SRP of $5.50 likely retails for around $6.50 in Oregon, that would increase to over $9 if the cap was to be removed. And it only would be worse for more expensive cigars. A cigar that retails for $10.50 currently would likely increase in price to $15.68, a cigar that retails for around $12 before taxes could now be as much as $20 due to the removal of the cap.

With the cap, Oregon currently has a cigar tax that is less than two-thirds of the U.S. states, if the cap was removed, it would become the fourth most expensive to place buy cigars. By one estimate, the cap could raise an additional $5 million in revenue annually for the state.

The move was introduced by Democrats, but it will need some Republican support to pass both houses of the Oregon legislature.

Update (June 30, 2015) — Legislators are in the process of modifying the bill, sources have told halfwheel that current versions do not include any modification to the cigar tax, preserving the tax cap. However, these changes are not finalized as of now.

This story was originally published on June 23, 2015.