Utah Tax Cap Advances

The proposed 50 cents tax cap has moved forward in the Utah House of Representatives. The bill, H.B. 58, would place a 50 cent cap on the state’s 86 percent tax rate. Currently, Utah has the highest uncapped rate in the nation.

While Utah is hardly the friendliest state in the nation when it comes to tobacco, the House Revenue and Taxation Committee voted 10-5 in favor of the bill, meaning it will now go for debate in the full House.

Last week, the Utah State Senate advanced a bill that would have raised the minimum age to purchase tobacco to 21. Currently, Utah is one of a few states where you must be 19 to purchase tobacco.

If H.B. 58 becomes law, the survival of the cap is not guaranteed. A sunset provision was added to the bill meaning that the cap could be removed if the revenues from the taxes are reduced.

Supporters of the measure argue that Utah’s high taxes encourage consumers to purchase the cigars from retailers in other states, products that the state do not collect tax revenue on. They believe that the new law would encourage consumers to purchase their cigars in the state, a change that would result in equal tax revenue.

A cigar with an MSRP of $7 will sell for around $13 under Utah’s current tax. The new law could reduce the cost for the consumer as much as $5 on the same $7 cigar.