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Tobacco Tax Hike Still Undecided in California

Andrew Nagy
Posted: June 12, 2012

There is still no official word on whether California cigar smokers will be paying more for a stogie, a full week after voters took to the polls to decide.

While it still appears as if Proposition 29 will not pass, hundreds of thousands of mail-in ballots still need to be counted. As of now, 50.4 percent of people have voted against raising the tax, while 49.6 percent are in favor.

If passed, Proposition 29, or the California Cancer Research Act, would raise the excise tax on cigars from 31.73 percent of the wholesale cost to 54.89 percent. In dollar terms, a cigar with a suggested retail price of $8 taxed at $1.20 under the current law would see its tax rise to $2.19 under Proposition 29.

In California, cigars are categorized as other tobacco products (OTP), along with roll-your-own and smokeless tobacco. The tax on cigarettes would also be raised by $1 per pack.

For the past two years, the state’s Board of Equalization, which controls tobacco taxation, had decreased the OTP tax. In 2010, the board lowered the tax from 41.11 percent to 33.02 percent, and the tax was again decreased last year to its current 31.73 percent.

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