Lawmaker: Budget likely to increase little cigar tax

By CARA LOMBARDO Markets Associated Press

Taxes on a type of cigar that looks like a cigarette may be going up in Wisconsin.

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Republican Rep. Dale Kooyenga has long pushed for little cigars, which have filters and are smaller than cigarillos, to be taxed the same as cigarettes, and he thinks there's enough support for the idea this year. The proposal is part of a larger Assembly Republican plan to pay for roads that appears to have a slim chance of passing.

Cigarettes in Wisconsin are taxed at a rate of $2.52 per pack, while the tax on a 20-pack of little cigars is based on the wholesale price and usually around 78 cents. Kooyenga wants both to be taxed at a rate of $2.52 per pack. He says the change would yield $450,000 more in taxes a year.

"Some of my friends on the conservative side would criticize us for trying to raise taxes," Kooyenga, a vice-chair of the Legislature's budget committee, said. "But 100 percent would go toward property tax relief."

The change would also increase the price of a pack of little cigars by almost $2. Little cigars are the same size as cigarettes and are smoked like cigarettes, but are treated differently under tax law because they're wrapped in brown paper that contains tobacco leaf. Well-known brands include Swisher Sweets and Cheyenne. The proposed change wouldn't apply to cigarillos.

More than 20 health organizations, including the American Cancer Society, the Wisconsin Medical Society and several Wisconsin hospitals, support the proposal.

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"This isn't a Cuban cigar we're talking about," Mark Graul, a lobbyist for the American Cancer Society, said of little cigars. "It's a cigarette."

Little cigars are particularly appealing to teenagers because they come in a range of flavors such as menthol, vanilla and wild cherry, Graul said. He said increasing the tax could prevent more teenagers from becoming smokers.

A quarter of high school students in Wisconsin say they've tried cigarettes, while a little less than that amount say they've tried cigars, according to a 2016 report from the Wisconsin Department of Health Services. But the students participating in the survey may not have differentiated between little cigars and cigarettes.

No one has publicly opposed the proposal to raise the tax on little cigars.

Even a spokesman for Altria, one of the largest producers of tobacco products, said the company supports uniform taxes on cigarettes and little cigars.

"Little cigars, which share many similarities with cigarettes in their appearance, packaging and marketing, should be taxed at the same rate as cigarettes," David Hutton said.

A spokeswoman for Senate Majority Leader Scott Fitzgerald didn't immediately reply to a message seeking his position, nor did a spokesman for Gov. Scott Walker. Walker has repeatedly said he refuses to sign a budget that includes a net increase in taxes and that he'll veto a budget that raises property taxes.

Eighteen other states have already passed laws to tax little cigars the same as cigarettes, according to the Campaign for Tobacco-Free Kids.

Taxes on cigarettes account for around 4 percent of all of the state's tax collections, according to the Legislative Fiscal Bureau. The state began taxing packs of cigarettes in 1939 and other tobacco products in 1981.

E-cigarettes, which are now more widely used by Wisconsin high schoolers than tobacco products, are not subject to excise taxes. They don't contain tobacco, only nicotine.

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This story has been corrected to reflect that a 20-pack of little cigars is currently taxed on its wholesale price, not its weight.

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Follow Cara Lombardo on Twitter at https://twitter.com/CaraRLombardo .