BILL NUMBER: S4413A
SPONSOR: RAMOS
 
TITLE OF BILL:
An act to amend the tax law, in relation to excise taxes on premium
cigars; and providing for the repeal of such provisions upon expiration
thereof
 
PURPOSE:
To establish the rate of the tobacco products tax exclusively for premi-
um cigars at seventy-five percent of the wholesale price or fifty cents,
whichever is less.
 
SUMMARY OF PROVISIONS:
Section 1 establishes the definition of "premium cigar".
Section 2 makes necessary technical amendments to paragraph (a) of
subdivision 1 of § 471-b the tax law.
Section 3 caps the amount of the tobacco products tax for premium cigars
at fifty cents per item.
Section 4 establishes the effective date.
 
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
Section 1 establishes the definition of "premium cigar" as wrapped in
whole leaf tobacco; containing one hundred percent leaf tobacco binder;
made manually combining wrapper, filler, and binder; having no filter,
tip, or non-tobacco mouthpiece and capped by hand; and weighing no more
than six pounds per one thousand units. Section 4 establishes the effec-
tive date and provides for repeal upon the expiration of three years.
 
JUSTIFICATION:
Tax rates on premium cigars in New York, coupled with the pandemic-fu-
eled shift to online purchasing, has driven the sale of these products
to neighboring states/online where tax rates are much lower (PA, 0%; NH,
0%; NJ, 30%; RI, 50 cents per; CT, 50 cents per). This has had severely
negative effects on the sustainability of over 200 premium cigar shops
in New York that were already suffering due to the COVID-19 pandemic.
Capping the premium cigar tax rate at fifty cents per item would mini-
mize the cost advantage of buying online as well as strengthen sales
within the State. Additionally, this would prove to be an effective
measure to help increase state revenues.
Establishing a tax cap at fifty cents per item will work to conform to a
number of other states and create an equal playing field for small busi-
ness retail tobacconists.
 
LEGISLATIVE HISTORY:
2022: S.6741-A (Ramos)/A.8156-A (Woemer)
 
FISCAL IMPLICATIONS:
Premium cigars are 2.5% of the market for tobacco products, not includ-
ing cigarettes.
 
EFFECTIVE DATE:
This act shall take effect immediately and shall expire and be deemed
repealed 3 years after such date.

Statutes affected:
S4413: 470 tax law, 471-b tax law, 471-b(1) tax law
S4413A: 470 tax law, 471-b tax law, 471-b(1) tax law