PREMIUM CIGAR TAX BREAK PROPOSED
Idaho could join its Pacific Northwest neighbors in cutting taxes on premium cigars. On February 16, Rep. Bill Clark of Hayden Lake in northern Idaho introduced a bill that would repeal the 40 percent tax on the wholesale price of premium cigars in exchange for a maximum tax of 50 cents per cigar. The cap would be applied only to hand-rolled cigars.
Fifty-cent caps were passed in Oregon and Washington in 2002 and 2005, respectively. Clark pointed to the positive results of this legislation in a fiscal note attached to the bill. "Passage of this legislation will result in more premium cigars being sold by the box in Idaho, resulting in more excise and sales tax revenue& .
Since 2002, when Oregon' s 50 cents per cigar cap became effective, premium cigar sales in the state (through 2004) have increased 37.7 percent, and excise tax revenue from premium cigars has jumped 164 percent." This cut, said Clark, "will make the retail sale of premium cigars more competitive with the neighboring states of Utah (which has a 35 percent tax) and Nevada (30 percent)& and on a level playing field with Washington and Oregon."
"This is a way of protecting the small tobacco retailers and businesses, which also results in more revenue for the state," said Norman Sharp of the Cigar Association of America, which is backing the legislation.
Under the existing Idaho tax, a box of 25 premium cigars costing $100 has a tax of $40. Based on the suggested cap, that tax would be reduced to $12.50.
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