Despite the SCHIP tobacco taxes that hit on April 1, 2009, cigar sales continue to persevere. The federal taxes on large cigars rose from 20.719% of the wholesale price with a tax cap of 4.875 cents per cigar to 52.75% of the wholesale price with a tax cap of 40.26 cents per cigar. The tax on little cigars jumped from four cents per pack to $1.0066 per pack, the same tax placed on cigarettes.
David Dill, vice president of sales and marketing for Gate Petroleum, Jacksonville, Fla., which operates 225 service stations with convenience stores in six southern states, said the increased tax rate hasn’t slowed sales. “Our cigar sales are up calendar year to calendar year about 7% for the category,” he said.
What’s more, even with the increase in price on little cigars, at around $2.19 they still are quite a bit less than a pack of cigarettes, and some customers are switching to the cheaper option.
Dill also has noticed increased interest in smaller cigars. “I think those probably are cigarette smokers moving over, so it seems to be the new trend—moving to the smaller cigars,” he said.
While the majority of Dill’s customers are young males ages 21-34, he credits the recent female influence on the category for uptick in cigarillos and smaller cigars. Dill also noted that Black & Mild continues to have a loyal following with Gate Petroleum customers.
STATE | TAX RATE |
Alabama | 4.05 cents per cigar |
Alaska | 75% of the wholesale price |
Arizona | 22 cents per cigar |
Arkansas | 68% of the manufacturers price |
California | 41.1% of the cost to the distributor |
Colorado | 40% of the manufacturer’s price |
Connecticut | 27.5% of the wholesale price |
Delaware | 15% of the wholesale price |
Florida | None |
Georgia | 23% of the wholesale price |
Hawaii | 50% of the wholesale price |
Idaho | 40% of the wholesale price |
Illinois | 18% of the wholesale price |
Indiana | 24% of the wholesale price |
Iowa | 50% of the wholesale price (capped at 50 cents per cigar) |
Kansas | 10% of the wholesale price |
Kentucky | 15% of the wholesale price |
Louisiana | 20% of the invoiced price |
Maine | 20% of the wholesale price |
Maryland | 15% of the wholesale price |
Massachusetts | 30% of the wholesale price |
Michigan | 32% of the wholesale price |
Minnesota | 70% of the wholesale price |
Mississippi | 15% of the manufacturer’s list price |
Missouri | 10% of the manufacturer’s list price |
Montana | 50% of the wholesale price |
Nebraska | 20% of the wholesale price |
Nevada | 30% of the wholesale price |
New Hampshire | 48.6% of the wholesale price (excludes premium cigars) |
New Jersey | 30% of the wholesale price |
New Mexico | 25% of the manufacturer’s price |
New York | 46% of the wholesale price |
North Carolina | 12.8% of the wholesale price |
North Dakota | 28% of the wholesale price |
Ohio | 17% of the wholesale price |
Oklahoma | 12 cents per cigar) |
Oregon | 65% of the wholesale price (capped at 50 cents per cigar) |
Pennsylvania | Little cigards taxed as cigarettes |
Rhode Island | 80% of the wholesale price (capped at 50 cents per cigar) |
South Carolina | 5% of the wholesale price |
South Dakota | 35% of the wholesale price |
Tennessee | 6.6% of the wholesale price |
Texas | 1.1 cents per cigar |
Utah | 35% of the manufacturer’s price |
Vermont | 92% of the wholesale price |
Virginia | 10% of the wholesale price |
Washington | 75% of the wholesale price (capped at 50 cents per cigar) |
West Virginia | 7% of the wholesale price |
Wisconsin | 71% of the wholesale price (capped at 50 cents per cigar) |
Wyoming | 20% of the wholesale price |
Washington D.C. | 12% of gross receipts for cigarsretailing at less than $2 each |