A tax reduction on cigars that hit the House floor of the Wyoming Legislature appears headed for approval, but has gone through several changes along the way, and may have more in store.
Senate File 42 has had an interesting journey from its starting point, and like many of the hundreds of pieces of legislation considered so far in the 2023 session has been through quite a few twists and turns making its way from the Senate to the House.
Those included some unplanned testimony from a trio of student interns at the Capitol, asked by a committee chairman for their input on the cigar tax and, at one point, jokingly urged to spark up some stogies in the committee meeting room.
The process in legislative-speak has long been referred to as making sausage, and SF 42 is an example of how a proposed new law can evolve and change from its initial language.
Sausage Step No. 1
Lawmakers in the Senate Revenue Committee last money unanimously approved a 30-cent tax cap on cigars sold in Wyoming and moved the date the tax is due to the point of sale to a customer.
Presently, Wyoming levies a 20% tax on cigars at the time a business buys them from wholesalers. That led to a much higher tax on more expensive premium cigars, which advocates said is confusing to consumers.
A customer might be paying pennies for one type of cigar and dollars on another.
Cigarette taxes, meanwhile, are per cigarette, rather than a percentage, which makes the tax more even across brands.
Because of that, lawmakers decided to remove the world “premium” from the cigar tax bill, deciding the cap could accomplish its aim without singling premium cigars out.
Cigar store owner Donovan Short, who owns Casper Cigar Co., told lawmakers fronting the tax before the product is sold adds an extra burden for small business owners, particularly for more expensive brands, which may or may not sell.
Sausage Step No. 2
After the bill passed the Senate Revenue Committee and the Senate Floor, it went next to the House Revenue Committee, which didn’t like capping the tax.
That committee deleted the 30-cent cap and put a percentage back, but lowered it from 20% to 10%. It also re-inserted the word “premium.”
Those lawmakers did, however, keep the original proposal of charging the tax when a cigar is sold to the consumer, not when the business buys it from a wholesaler.
They also added $577,000 in operational startup costs for the Department of Revenue before approving a motion to recommend approval of the amended bill.
Sausage Step No. 3
Enter the House Appropriations Committee, which questioned why the cigar tax is being lowered at all.
“Why would we do that?” asked a mystified Chairman Rep. Bob Nicholas, R-Cheyenne.
No one was there to speak for or against the bill at that committee meeting. Three student interns were there, however, so lawmakers asked them to come up and answer questions about the cigar tax.
“We want you both to light up and see if you like it,” Nicholas told the students, laughing.
When the students seemed concerned they would get into trouble, Nicholas added, “You can do anything we tell you.”
The students were told by Rep. Lloyd Larsen, R-Lander, that the bill puts an 8-cent tax on cigars.
Nicholas asked the students if that sounded high or low.
“Sounds kind of high,” the female student said.
But the tax on cigars in the bill now isn’t actually a straight 8 cents. It’s a percentage, which means it varies based on the cost of the cigar. It could be pennies for an expensive cigar or dollars for a much more expensive one.
The female intern, who was not identified during the proceeding, asked lawmakers at one point if the percentage concept poses a problem for small businesses, since a cigar shop would be paying both the cost of the premium cigar up front as well as the taxes on a product that hasn’t yet been sold.
“Well, whoever is going to pay $10 for a cigar will pay $12,” Nicholas replied. “I think that answers that question.”
The female intern said she didn’t know much about cigars.
“Well, I think that’s your assignment,” Nicholas replied, laughing again. “We want you to go smoke a cigar.”
In the end, however, none of the interns had to smoke cigars for the committee.
Cigar Money For Snow Plows
Asked if a cigar tax is a good idea, the female student wanted to know if the tax is being collected to deal with health issues or just for additional revenue.
“It’s more money for us,” Nicholas said.
She suggested at that point the cigar tax money should be put into snowplows. Her fellow interns agreed with that wholeheartedly.
One of the two male students, who also wasn’t identified, suggested suppliers should be the ones paying the cigar tax, rather than cigar shops so that costs aren’t directly passed on to consumers.
Once the public testimony from the students was closed, lawmakers moved an amendment reducing the operational startup money from $577,000 to $265,000, but a motion to recommend passage failed.
Nicholas suggested that should move the bill on the bottom of the list.
Still Not Done
The cigar tax bill has so far overcome a recommendation from House Appropriations against it and has made it through two of three readings required to pass the House floor.
If it passes the House in its present form, it would have to head back to the Senate for concurrence, since amendments were added during House deliberations that don’t match what the Senate approved.
But more amendments could be coming for the bill to realign it with what the Senate approved.
“We’ve had some very thoughtful and productive conversations with several senators and representatives, both through the inception of SF 42 and this week through the recent amendments it received in the House,” Short told Cowboy State Daily on Friday. “Those conversations continue next week at the Capitol, and we’re hopeful to emerge with policy that’s a win for Wyoming consumers and Wyoming’s small brick-and-mortar tobacconists.”
