Effective Nov. 1, the tax rate on premium cigars in the state of Michigan has changed. Cigars that cost $1.5625 or more will be taxed at a rate of 50 cents per cigar. Cigars that cost less than $1.5625 each will continue to be taxed at 32% of the wholesale price of the cigars.
The legislation allows state tobacco dealers to compete with online companies. The change also means that modifications must be made to the manufacturer, wholesaler, and unclassified acquirer tax returns for the tax periods beginning Nov. 1, according to a state Department of Treasury notice.
The new law requires a retailer who is licensed as an unclassified acquirer—a retail importer of tobacco products other than cigarettes—to post a sign visible to the public inside the retail establishment that informs purchasers of cigars through catalog sales or internet sales of their responsibility to pay all applicable unpaid state taxes on those cigars.
Michigan is the eighth state to adopt a tax cap of some sort on premium cigars, joining Oregon, Washington, Rhode Island, Wisconsin, Iowa, Connecticut, and Vermont, said a report by Cigar Aficionado. (CSP Daily News: www.cspnet.com)