Over the weekend, the Rhode Island legislature and governor hammered out the final version of the state’s budget for the upcoming fiscal year, with a proposed increase to the state’s cigar tax cap left on the cutting room floor.
An initial proposal by the governor would have raised the cap from 50 to 80 cents per cigar, while the tax on little and cigar cigarettes would increase from $4.25 to $4.50 per pack and add e-cigarettes would be subject to the tax on other tobacco products.
Rhode Island has a tax rate of 80 percent of the wholesale price on what are referred to as “other tobacco products,” a group that includes premium cigars and snuff. In the case of a cigar with a suggested retail price of $9.50, a consumer would pay $10.50 at the register—before any sales taxes were added—with the 50 cent cap. Had the increase been kept in the budget proposal, that cost would have gone up to $11.10, by halfwheel estimates.
