Delaware Cigarette Tax, Business Fees May Rise

Press enter to search
Close search
Open Menu

Delaware Cigarette Tax, Business Fees May Rise

WILMINGTON, Del. -- Despite calls to wait until a final state revenue report is issued June 16, lawmakers could face votes next week on bills raising cigarette taxes, and business taxes and fees.

House Bills 91, 92, 93 and 95 could generate $114.5 million, helping the state to bridge a $225 million gap between new revenues and mandated cost increases. The proposed cigarette tax would increase prices by 26 cents a pack. The other bills would create the first increase in business taxes and fees since 1991. The legislation also would mark the first increase in taxes for limited liability corporations since the state first allowed them in 1994.

Also at the hearing, the Delaware United Smokers Association called on lawmakers not to go along with Minner's request to increase cigarette taxes from 24 cents a pack to 50 cents a pack, saying the tax would be hard on the poor and elderly. They also claimed the tax could increase black market activities.

During the hearing, several registered agents who represent companies and limited liability corporations said the proposed tax increase from $100 to $200, and late filing fee increase, would drive away new business and send companies already registered in Delaware elsewhere. The move is estimated to bring in about $21.7 million.

"A lot of the smaller, mom-and-pop stores are very price sensitive," said Murray Sawyer, founder and chairman of the RAL group, which represents five businesses that handle dealings for Delaware corporations. "I think Delaware could be pushing business to Maryland and other states by doing this."

Maryland does not charge a tax for limited liability corporations unless the businesses generate money in state. Finance Secretary David Singleton said the state's 215,000 limited liability corporations are growing. The state expects to add 51,000 this year, he said, though the number is estimated to decrease by as much as 10 percent if the bills pass.