Changes tax provisions to allow little cigars to be taxed at the same rate as cigarettes

BILL NUMBER:A9015A

Title of bill

An act to amend the tax law, in relation to little cigars

Summary or specific provisions

This bill defines little cigars to include any cigar product, other than a cigar product wrapped in natural leaf tobacco wrapper that weighs not more than four pounds per thousand. Such little cigars are practically indistinguishable from cigarettes and are often consumed as less expensive cigarette alternatives. It makes sense to level the playing field by taxing little cigars and cigarettes at the same state excise tax rates.

New York State currently imposes a $2.75 state excise tax per pack of cigarettes. The state excise tax on little cigars is 46W of the whole- sale price. Given the current wholesale prices for little cigars, impos- ing a $2.75 excise tax on little cigars would substantially increase the state's tax receipts per package and thus create greater revenue for the state.

The bill makes clear that if a product fits within the definition of little cigar, but at the same time also meets the definition of ciga- rette under the expanded definition of cigarette that was expanded last year, such product will be treated for all purposes of the excise tax law (e.g. the stamping requirements) as a cigarette and not as a little cigar.

Justification

Equalizing the tax rate on little cigars and cigarettes serves important public health goals by increasing the retail price of such products, which can be expected to reduce consumption levels of little cigars, especially among those under the legal smoking age.

Prior legislative history

New bill.

Budget implications

Adoption of these amendments would generate net revenue increases for New York State, compared to revenue collections under current law. This bill will increase the state's receipts by $11 million in 2009-10.

Effective date

The amendments would take effect July 1, 2010