(Ed. Note) Updated Oct. 1 - An earlier version incorrectly reported that Gov. Snyder had already signed the tax bill.
Cigar consumers in Michigan have reason to cheer as it appears the state's excise tax on cigars will soon be capped at 50 cents per stick. The new tax, which is still awaiting Governor Richard Snyder's signature, is expected to take effect on November 1.
Since an excise tax is considered an indirect tax, tobacconists usually pass the extra cost on to the consumer to recover what they have paid to the government. Michigan’s current excise tax is 32 percent of the wholesale price of a cigar, so the 50-cent cap will be a pleasant reduction. Under the current tax, a $10 cigar, which can carry a $5 wholesale cost for tobacconists, would usually have $1.28 added to the retail cost, not including federal taxes.
Michigan will become the eighth state to adopt a tax cap on cigars, joining Oregon, Washington, Rhode Island, Wisconsin, Iowa, Connecticut and Vermont.