West Virginia Senate Passes Bill With Tobacco Tax Increase

A bill containing a drastic increase to the tobacco tax in exchange for a gradual phase out of personal property taxes on manufacturing machinery, equipment, automobiles and inventory has passed the West Virginia Senate by a single vote, and now heads to the House of Representatives for consideration.

SB 837 contains a provision that would raise the tax on tobacco products such as premium cigars from 12 percent of the wholesale price to 50 percent, a change that would make a cigar with an MSRP of $9.50 go from $10.64 to $14.25 by halfwheel estimates, and that’s before any sales taxes are added.

It is part of a number of increases in the tax on tobacco products and e-cigarettes. The cigarette tax would increase from $1.20 to $2 per pack, while e-cigarettes and vaping products would also be subject to the 50 percent rate, a change from the current rate of 7.5 cents per milliliter. The proposal would also increase the state’s sales tax from 6 to 6.5 percent.

The bill passed by a 17-16 margin with one member absent.

Adding some complexity to the matter, the bill would only go into effect if another piece of legislation, Senate Joint Resolution 9, is approved by voters, as it is a constitutional amendment that grants the legislature the right to eliminate or lower Ad Valorem Tax on personal property. If that happens and this bill passes the House and be signed into law, the increases would go into effect on July 1.