If you purchased a cigar in West Virginia yesterday, you may have noticed that it cost a bit more than it did the day before. The reason? The state’s tax on other tobacco products such as cigars was recently raised by the legislature and governor as part of their plan to close an estimated $270 million budget shortfall, and that increase went into effect on July 1.
The proposal to raise the tax rate has been a back-and-forth debate amongst state legislators dating back to March, with debates arising again in May and early June. The tax on cigarettes was the main driver, with proposals ranging from a per pack increase in the tax from 45 cents to one dollar, with the legislature finally agreeing on a 65 cent per pack increase. For other tobacco products such as cigars, the tax rate was raised from 7 percent to 12 percent of the wholesale price. E-cigarettes and vapor products will also be taxed, though an amendment passed by the House changed the rate to $.075 per milliliter rather than the proposed point of sale tax.
By halfwheel estimates, a cigar with an MSRP of $9.50 has gone from costing $10.17 to $10.64, before any state and local sales taxes are added.
All together, the tobacco tax increase is projected to generate approximately $100 million in revenue.