A bill that is moving through the New Jersey state senate could bring a significant change to the current tax rates placed on all tobacco products and e-cigarettes in the state, including premium handmade cigars.
Senate Bill 1867 made it through the Senate Health, Human Services, and Senior Citizens Committee on Monday and was referred to the Senate Budget and Appropriations Committee. The bill is described by NJ.com as a legislative version of Gov. Chris Christie’s 2015 budget, which seeks to raise upwards of $22 million from taxes on tobacco products and $35 million from taxes on e-cigarettes.
While the general tobacco tax rate would be raised from 30 percent to 68 percent of wholesale, the bill provides specific tax rates for certain tobacco products. For premium cigars, the tax would change from 30 percent of the wholesale price to a flat tax of $2.70 per cigar, the same tax that is currently levied on a pack of cigarettes. In practical terms, that means that the tax on all cigars with a wholesale price of under $9.00 would go up, affecting the vast majority of cigars currently on the market.
Pipe tobacco and smoking tobacco would also see a chance from the 30 percent tax rate to a tax of $4.15 per ounce. Cigarillos will be subject to tax at a rate of $0.54 for each cigarillo, while little cigars will be subject to tax at a rate of $0.135 for each little cigar.
For e-cigarettes, the bill seeks a tax rate of 75% of the wholesale price to bring the tax burden in line with tobacco products.
The bill would also create a requirement that any business dealing with tobacco products obtain a license from the Division of Taxation in the Department of the Treasury. Retailers would be subject to an annual fee of $50, while wholesalers would pay $250 and manufacturers and distributors would pay $350 for their licenses. A separate license would be required for each location of a business, meaning a retailer with three stores would have to obtain three licenses.
Whether or not the bill has enough support to pass both houses of the New Jersey legislature remains to be seen as members of the Assembly Budget Committee have already voiced opposition to the proposal.