Pennsylvania Survives Cigar Tax

Last year, bill S.B. 1292 was introduced to the Pennsylvania legislature that would impose a 3.6 cents per cigar tax. This would have been an increase from the current 0 percent tax that so many cigar retailers rely on. While that seemed bad enough, Gov. Tom Wolf’s 2015 budget proposal included an astounding 40 percent sales tax on wholesale cigars. This would have made Pennsylvania cigars among the most expensive in the nation, right next to Colorado and Idaho, potentially altering cigar shipment patterns nationwide. The only other states that benefit from a 0 percent tax are Florida, New Hampshire, and Washington D.C. Many private and business to business companies benefit from the 0 percent Pennsylvania tax on wholesale cigars and would have been hurt if the budget proposal passed, pushing them to other locations. According to a Pennlive article, Wolf’s proposed tax would “raise an additional $358 million [on cigars]; taxes on other tobacco products an additional $84 million, according to administration forecasts.” The could have severely depressed the Pennsylvania tobacco market.

Fortunately, the budget proposal was defeated unanimously, 193-0. While this was an obvious save for the Pennsylvania cigar industry, June 30 marks the official end of the year’s fiscal budget and leaves room for the cigar tax to be reconsidered. The International Premium Cigar & Pipe Retailers Association is negotiating for the tax to continue being withheld.