New Jersey Considers Little Cigar Tax

Bill seeks to tax little cigars like cigarettes

A bill under consideration in New Jersey is seeking to even the playing field of cigarettes and little cigars, by taxing them the same.

"The additional tax will make little cigars less appealing to current cigarette smokers seeking a cheaper alternative," reads the bill proposed by State Senator Paul Sarlo (D-Bergen, Essex, Passaic), according to The Press of Atlantic City.

New Jersey's $2.70 per cigarette pack state excise tax makes it the sixth highest in the country. In 2010, the Office of Legislative Services estimated that the bill would increase tax revenue from $6 million to nearly $9 million. The office also estimated that more than 5 million packs of little cigars were sold in fiscal 2010.

Although New Jersey collected nearly $742 million in cigarette taxes last year, it was a 4% drop, or $33.1 million less than 2008, according to state Treasury Department data.

Revenue from other tobacco products, however, went up 26% in that time frame -- generating $3.7 million more, despite lower tax rates. The state has a wholesale tax on those products that is 30% of the price the wholesaler pays the manufacturer.

One retailer, who has come to rely on the higher-margin sales of little cigars, told the paper, "People will still buy them, as long as they're reasonable enough. … As long as there are savings involved, I think a market will still be there."

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