Reduce Premium Cigar Excise Tax Rate
If passed, SB 25-056 will amend existing taxation statutes by establishing a new lower tax rate for premium cigars, which could lead to increased sales and consumption of these products within the state. This bill specifically defines 'premium cigar' as a product that is hand-rolled, consists of whole tobacco leaves, and is sold without filters or mouthpieces. It acknowledges the existing 20% tax imposed by the state constitution, indicating no changes will be made to that component of cigar taxation. The proposed legislation could also have fiscal implications regarding state revenue generated from tobacco taxes.
Senate Bill 25-056 aims to reduce the excise tax on premium cigars in Colorado, capping it at 20% of the manufacturer's list price (MLP). Currently, the tax rate on non-cigarette tobacco products other than moist snuff is significantly higher, at 36% to 42%. This change is set to take effect on July 1, 2025, and will apply exclusively to premium cigars as defined in the bill. The legislation is viewed as a rollback of tax increases implemented since 2005 and is designed to provide financial relief for consumers and businesses engaged in the sale of premium cigars.
Discussions surrounding the bill may reveal an array of opinions, primarily concerning its impact on public health perceptions and tobacco control policies. Supporters argue that the reduction in tax could stimulate local commerce in the tobacco sector and align Colorado’s tax rates more closely with neighboring states. Critics, however, may contend that favors to the tobacco industry could exacerbate health issues linked to tobacco use, particularly among vulnerable populations. In this context, the debate may touch on the balance between supporting local businesses and safeguarding public health.