Michigan Getting Cigar Tax Cap Soon

(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.

"Oh my God. Did you just give away the amazing and huge secret of wholesale costs of a cigar? Buy for $5 and sell for $10? This is one of the supposed "reasons" that the IPCPR doesn't want online journalists and/or consumers at the trade show. They may find out that there is a markup on cigars!! Doubling their price! Insanity! You've let the cat out of the bag now, CA. I expect you won't be allowed to cover the show next year. Or maybe just don't mention the super secret word "keystone" and you might be ok." —October 2, 2012 18:28 PM
"This is great news. Premium cigars have been the target lately and while no tax is preferred; not realistic. The momentum needs to swing back to the smokers." —October 1, 2012 16:31 PM