California Passes Higher Cigar Tax

The good news is, voters in three states—Colorado, Missouri and North Dakota—yesterday defeated ballot measures that sought to raise the tax on cigars in their respective states. The bad news is that California voters didn’t.

More than 62 percent of California voters opted to pass Proposition 56, which will raise the tax on cigars in the state by a whopping 153 percent. Currently, the tax on cigars is 27.3 percent of the wholesale cost, but this vote will lead to a new tax that’s expected to be 69.2 percent of the wholesale cost. The state, one of the world’s largest markets for cigars, is unusual because it bases its cigar tax on the rate of taxation on cigarettes. The new tax will likely take effect on July 1 of next year.

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This means that the state tobacco tax for a $10 cigar will jump from $2.73 to $6.92.

Fortunately, cigar smokers in Colorado, Missouri and North Dakota won’t have to worry about increased taxes, as voters in all three states defeated measures that would have raised the tax on cigars sold in those states.

In Colorado, Amendment 72, which sought to raise the cigar tax to 62 percent, was defeated. Approximately 53.6 percent of voters opposed the bill, with 46.4 percent supporting it.

North Dakota’s Initiated Statutory Measure 4, which sought to double the cigar tax, was soundly defeated by 61.52 percent of voters.

Eligible voters in Missouri voted no on two tobacco-related measures, Amendment 3 and Proposition A. While both measures looked to raise cigarette taxes, Proposition A included language that called for an additional 5 percent sales tax to OTP products, which include cigars. However, 55.26 percent of eligible voters said no to the measure.

*Credit: Cigar Aficionado