Bill to cut premium cigar tax in half sails through committee

Charlie Megginson Government, Headlines

Cigars

The House Revenue and Finance Committee on Wednesday voted to release a bill that would reduce the tax on premium cigars from 30% to 15%. 

Senate Bill 131, sponsored by Sen. Laura Sturgeon, D-Hockessin, aims to make Delaware’s tax on hand-rolled cigars consistent with the tax rates in surrounding states.

The tax rate in Maryland is 15% and there is no tax on premium cigars in Pennsylvania.

Under the bill, premium cigars are defined as rolls for smoking that:

  • Are made entirely of tobacco, including the wrapper, binder, and filler;
  • Hand-rolled; and
  • Contain no filter, tip, or any mouthpiece consisting of material other than tobacco, or any additional flavoring.

Sturgeon said the bill is necessary to help businesses in the industry that suffered economically during the pandemic. 

Because all Delawareans live in close proximity to states with lower or no tax on premium cigars, many users opt to drive out of state, she said.

Opponents argued the bill is a step in the wrong direction. 

The 30% tax, which the legislature passed in 2015, serves as an effective deterrent to what they characterize as a dangerous health risk, they said.

If the tax is reduced, they argued, Delawareans will be at higher risk for disease, including throat and lung cancer. 

Proponents responded that premium cigars are not inhaled, targeted toward children, or smoked when the weather is not conducive to relaxation. Cigars are most often used as a means of celebration for graduations, birthdays and promotions, they said. 

If passed, the bill is expected to save business owners $627,000 per year. That loss for the state is not accounted for in the governor’s proposed fiscal year 2023 budget. 

The bill will now advance to the House floor for consideration.

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