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New York Governor Calls for Huge Cigar Tax Hike

David Savona
Posted: April 29, 2010

Corrected May 4; original had erroneous tax calculations.

Beleaguered New York Gov. David A. Paterson proposed a $620 million plan this week aimed at bridging the gap in the New York state budget. One of the ways he intends to raise that money is via a huge increase in the Empire State's tobacco taxes.

Paterson proposed a near doubling of the tax on cigars, pipe tobacco and chewing tobacco. The tax on those items currently stands at 46 percent of the wholesale price. Paterson's plan calls for that tax to soar to 90 percent.

Most premium cigars are priced at keystone, meaning the wholesale price is 50 percent of the suggested retail price. A consumer buying a cigar with a $10 suggested retail price in a New York store currently pays $2.30 in tobacco taxes to the state. If Paterson's plan goes through as proposed, that tax would soar to $4.50.

New York's cigar tax was raised only one year ago, up from 37 percent.

This tax hike would have an impact felt throughout the cigar industry, as New York state ranks among the largest markets for virtually every cigar company.

The Cigar Rights of America is organizing a consumer action to contact legislators in New York to voice their opinion of the tax hike. For more information, click here.

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