TRENTON, N.J. – New Jersey’s wholesale cigar tax could go up in smoke under a bill introduced by Assemblyman Brian Bergen to win business back from Pennsylvania — one of two states that does not tax medium- to large-size premium cigars.
“New Jersey currently taxes cigars at 30 percent of the wholesale price with no cap. Just across the border, Pennsylvania sells cigars with zero tax. We have fantastic tobacco shops and local cigar bars that offer hand-rolled and high-quality products, but they are having a hard time competing with our neighboring state because of costs,” said Bergen (R-Morris).
One analysis found that there were about 200 Pennsylvania premium cigar retailers along or not far from the border of New Jersey.
“While we can’t completely snuff out the competition, we can do something to encourage residents to shop from local independent cigar retailers,” said Bergen. “We must cut the tax if we want cigar smokers to spend more of their money in New Jersey.”
Bergen’s bill would limit the taxation of cigars under the Tobacco and Vapor Products Tax Act to a maximum of 50 cents per cigar. Ten states have adopted a similar tax cap per cigar.
“If we cut the cigar tax, we would see an increase in sales tax revenue because people would purchase more in the state,” explained Bergen. “Our excessive tax is only hurting small businesses and our opportunity to realize additional revenue.”