Bill to permanently cap cigar tax would cost Michigan millions of dollars

Michigan

LANSING, Mich. (WLNS) – A bill to keep Michigan’s cigar tax low, costing the state millions of dollars per year, has cleared committee and is headed for the floor of the State House.

The Michigan cigar tax is 32%, but for years it has been capped at 50¢ per cigar. That means any cigar that costs more than $1.56 is being taxed at a lower rate.

Back in 2016, then-Governor Rick Snyder approved extending that cap to October of this year to help Michigan’s cigar retailers compete against out-of-state vendors.

However, Snyder vetoed a measure to make the cap permanent, saying it was appropriate for it to expire. Republican State Rep. Matt Hall has re-introduced that bill in the State House, and it has cleared the Committee on Tax Policy.

According to the legislative analysis of the bill, this would cost the state an estimated $4.3 million per year in lost cigar tax revenue. Of that money, 75% would go to the Medicaid Trust Fund, and the rest would accrue to the state’s general fund.

Click here to read House Bill 4485 for yourself.

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