NYC Mayor Wants Higher Tobacco Taxes



The price of cigars in the City That Never Sleeps could possibly go up—significantly. Yesterday, New York City Mayor Bill de Blasio pledged his full support for an aggressive anti-tobacco legislative plan aimed at raising the price of cigars and cigarettes. The series of new bills proposes more taxes, extra fees and increased restrictions on tobacco sales in New York City. The major regulations include:

  • Raising minimum prices for cigars and cigarettes;
  • Imposing an additional 10 percent tax on cigars and other tobacco products, known as OTP;
  • Limiting the number of new tobacco retailers throughout the city;
  • Banning the sale of tobacco in pharmacies.

The main focus of the legislation appears to be cigarettes, but—as it happens so often with legislation—cigars will be affected as well. In an attempt to discourage tobacco use throughout the city, de Blasio wants to raise the minimum price of cigarettes from $10.50 a pack to $13—and he's looking to tax little cigars at precisely the same rate.

A 20-count pack of cigarettes, however, is standard. Little cigars can take on many different packaging formats. By the new rules, retailers would only be allowed to sell little cigars in packs of at least 20, ensuring that minimum prices for little cigars are paid consistently. A "little cigar" is defined as any roll of tobacco that weighs no more than four pounds per thousand.

For regular cigars, known as "large cigars" in government parlance, their minimum price would be calculated at $2 per stick with a minimum of $8 per package, or a four-pack. That means that a standard box of 25 cigars cannot cost less than $50 if purchased in New York City. A five-pack of cigars could not cost less than $10. While this won't affect premium cigars, which are often far more expensive, it will significantly raise the price of machine-made cigars.

Think that's high? New Yorkers will have to dig even deeper into their pockets. In addition to the minimum price requirements, both little cigars and large cigars would be further taxed at 10 percent of the established minimum price. So the extra charge on a box of 25 cigars would come to $5. The proceeds of the additional 10 percent are earmarked to fund public housing.

By comparison, ordering cigars out of state from an internet or catalog company already saves the buyer sales tax and tobacco tax. Should these newly proposed measures become law, the average New Yorker would have even more incentive to purchase tobacco through out-of-state, mail-order channels.

Increased taxes and price hikes aren't the only anti-tobacco objectives. This series of bills also aims to restrict the number of new tobacco retailers by setting caps on the number of new tobacco licenses granted by the city. According to the bill summary, the restrictions will "decrease the number of licenses over time through attrition." It would not affect existing businesses, so no current tobacco retailers would lose their license.

Pharmacies would also be prohibited from selling tobacco products as well.

The bills draw no distinction between machine-made or handmade premium cigars, nor do they differentiate between convenience stores or upscale tobacconists. Under the proposed laws, a Phillies Blunt and Fuente Fuente OpusX would be treated equally.

The legislation was introduced by city council members Cory Johnson, Brad Lander, Fernando Cabrera and Ritchie Torres. The bills are scheduled to be heard by the Health Committee on April 27.

Ironically, this move comes only four months after New York Gov. Andrew Cuomo proposed a state budget that would have lowered the state tax on premium cigars in New York via a 45-cent cap. That move didn't make it to the final budget, which passed last week.

Steven B. JustBee April 25, 2017 2:18pm ET
"Ironically, this move comes only four months after New York Gov. Andrew Cuomo proposed a state budget that would have lowered the state tax on premium cigars in New York via a 45-cent cap. That move didn't make it to the final budget, which passed last week."

It's hard to find a politician who dislikes tobacco taxes, whatever the form.

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