This bill amends the Tobacco and Vapor Products Tax Act to limit the tax on cigars to a maximum of $0.50 per cigar, while maintaining the existing tax rate of 30 percent of the wholesale price. The legislation aims to address competitive disadvantages faced by local cigar retailers in New Jersey, who have struggled against out-of-state and online businesses that do not collect state tobacco taxes. By capping the tax, the bill seeks to encourage consumers to purchase cigars from local brick-and-mortar retailers, which are often small, locally-owned businesses, thereby potentially increasing state revenue from tobacco taxes.

Additionally, the bill clarifies the tax payment responsibilities for wholesalers and distributors of tobacco products. It specifies that if a distributor or wholesaler fails to pay the required tax, the retail dealer or consumer will be responsible for paying the compensating use tax directly to the director of the Division of Taxation. This change is intended to streamline tax collection and ensure compliance among tobacco product sellers. The bill is set to take effect on the first day of the second month after its enactment, applying to all sales, uses, or distributions of cigars from that date forward.

Statutes affected:
Introduced: 54:40B-2, 54:40B-3, 54:40B-5