As the Joint Finance Committee finalizes Wisconsin’s biennial budget, twenty-five organizations urge the committee to preserve the provision in the Assembly GOP tax and transportation package that closes a loophole in current law which allows cigarette-like little cigars to be taxed less than cigarettes.
The little cigars impacted by this proposal are nearly identical in size and shape to cigarettes, are sold in cigarette-like packs of 20, and have a filter like a cigarette. While little cigars are nearly identical to cigarettes, because they are wrapped in brown paper containing some tobacco they are taxed as a percentage of their wholesale price rather than on a per-pack basis. This tax loophole means a pack of 20 little cigars may be taxed as low as $0.78 per pack, depending on its wholesale price, while a pack of 20 cigarettes is taxed at $2.52 per pack. Because of lower taxes, little cigars cost much less than cigarettes making them more appealing to youth.
The proposed language in the Assembly GOP package led by Representative Kooyenga is a common-sense solution that simply requires little cigars to be taxed at the same rate as cigarettes.