Sales taxes on tobacco products in New York, particularly cigarettes, have increased steadily in recent years, and the state boasts the highest in the nation at $4.35 a pack.
The Senate’s one-house budget bill wouldn’t change that, but it would reduce taxes on cigars. The current excise tax on cigars is 75 percent of the wholesale price. The Senate wants to cut that to 75 percent of the wholesale price or 50 cents, whichever is less. The tax on cigars with a wholesale price of $2.25— about $8.00 retail, including tax—would be lower than it is now, for example.
“Why the Senate would want to cut the tax on cigars is beyond me,” said Blair Horner, the American Cancer Society’s vice president of advocacy for New York and New Jersey. “All you’re going to do is make it easier for people to smoke them, and for children to start smoking them.”
The budgets proposed by Gov. Andrew Cuomo and the Assembly would not change the cigar tax. Lawmakers and the governor are in negotiations on the 2013-14 state budget. The new fiscal year begins April 1, although a new budget is expected before then.
A spokesman for the Senate Republicans did not immediately respond to a request for comment. The Independent Democratic Conference, which jointly controls the Senate with the GOP, had no comment on the cigar-tax proposal.
Cigar smoking has increased dramatically since 1993, according to the American Cancer Society. Consumption grew 123 percent between 2010 and 2011. At the same time, cigarette smoking decreased 32.5 percent, the group said.
The cigar tax of 75 percent of the wholesale price applies to large cigars. The cigarette tax is the same for all cigarettes, regardless of the wholesale price. In most cases, the tax is more than the wholesale cost of the cigarettes.
Cigars don’t cause as much lung cancer as cigarettes, but smoking them can lead to cancers of the lung, oral cavity, larynx and esophogus, the American Cancer Society’s memo opposing the cigar tax said. People who are heavy cigar smokers have a higher risk of coronary heart disease and chronic obstructive pulmonary disease, it said.
Here’s Horner speaking about the proposal:
1 Comment
The reason for cutting the tax is to bring tax revenues back to NY. Currently NY State is losing millions of dollars in tax revenue through purchases of “OTP/Other Tobacco Products (all tobacco products except for cigarettes) through internet and mail order sales that are purchased by consumers tax free from other states. While the onus is upon the consumer to pay for this tax, enforcement is very low to none by the NYS Tax Department. People generally tend to find other avenues of purchasing goods when the price is dramatically increased as happened in 2009. Mr. Horner needs to realize that this tax has only driven this business to the internet and mail order, reducing revenues of NY based tobacco retailers and NY State as well.
While cigars are not healthy, they are still being consumed and obviously the American Cancer Society shows a dramatic increase from 2010 to 2011. I would find it hard to believe that tax revenues increased in this category by that amount during that same period. I also do not understand why the American Cancer Society/Mr. Horner would promote reducing funding to the Children’s Health Insurance Plan, since that is where these tax revenues are supposed to be allocated to. I wonder whether the American Cancer Society has studied the amount of cigars/tobacco that is shipped into NY State on a monthly basis from Internet/Mail Order Retailers. I think if you took that amount and applied the 75% tax you would find a rather astonishing source of tax revenue for NY State.
Until there is a method to enforce tax collection from Internet/Mail Order Retailers, NY state will continue to be amiss of these much needed revenues, and businesses will continue to close. This money is desperately needed for NY State, whether it’s Hurricane victims, Needy children, Vets, and a host of other categories, we shouldn’t just throw this money away. If the majority of people are unaware of the health detriments from smoking by now, then they need to move into the 21st century. I think we all know smoking is harmful to our health, but for some reason many of us continue to smoke. Why?, you ask, I don’t know, but I do know that the state and these businesses could use the extra revenues, so why not collect on it.
Besim Cukaj
Proprietor
Besim’s Fine Cigars
Southampton, NY