New Law Would Cap Cigar Tax

By Benjamin Cox on April 4, 2021 at 10:43am

Illinois lawmakers are looking to make it cheaper to smoke a cigar in the state. A current proposal would cap the state’s per cigar tax to 50 cents, rather than the current 36% rate in place.

The Illinois Center Square reports that Chief Sponsor 57th District Democrat Representative Jonathan Carroll says the current taxation system drives many Illinois residents to order cigars online through wholesalers and online retailers to avoid paying the high tax. According to industry insiders, online sales of cigars have grown by 40% over the last two decades.

The federal tax cap on large cigars is 52.75% of the sales price, but not to exceed 40.26 cents per cigar.

U.S. Senator Dick Durbin also is presenting hurdles at the federal level by reintroducing a tobacco tax increase as part of a bill that is otherwise intended to address maternal mortality. The Mothers and Offspring Mortality and Morbidity Awareness Act (MOMMA’s Act) would change the tax code and treat the entire tobacco industry including vaping products as cigarettes. The result is an estimated 500% to 1,000% increase on the tax for premium cigars and vaping materials.

The Cigar Association of Illinois and other tobacco representatives say that the unusually high taxes are depriving the state of revenues.