Pennsylvania Eyes First-Ever Cigar Tax

Andrew Nagy
Posted: September 14, 2009

As Pennsylvania lawmakers continue to disagree on how to end a 76-day budget impasse, cigar industry members are fearful that the state may pass its first-ever cigar tax to boost tax revenue.

In March, Gov. Edward Rendell proposed, among other taxes, a 3.6 cent-per-cigar tax as a way to overcome a $3.2 billion budget shortfall that existed due to an unexpected decline in tax revenue.

Today, Rendell said he planned to veto a budget proposed last Friday that raises taxes on many products, including cigarettes, but does not include a tax on cigars. According to a Washington Post news report, the governor believes the budget proposal is unbalanced because tax revenues will fall short of the projected amount. It is feared higher taxes may be considered.

The International Premium Cigar and Pipe Retailers organization worries lawmakers may resort to writing the 3.6 cent-per-stick cigar tax back into any new budget proposal.

"These [tobacconists] are small businesses that hire local people and pay local, state and federal taxes. There are more than 70 members of IPCPR in the state of Pennsylvania. They have hundres of employees and pay millions in sales, payroll and excise taxes," said Chris McCalla, legislative director of the IPCPR, in a press release.

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