Georgia Senators Mull Changes in Cigar Tax Collection

ATLANTA -- Georgia state senators gathered yesterday to hear arguments from retail and tobacco company lobbyists as they consider whether to seek changes to how cigars are currently taxed in the state.

According to the Times-Herald, the Department of Revenue testified before the Tax Collection Technology Subcommittee of the Senate Finance Committee that 7 to 23 percent of tobacco sold in the state is not taxed as required by law. The figure comes primarily because cigars, unlike cigarettes or chewing tobacco, are sold separately and do not come in packages that carry a tax stamp.

Any changes to the tax collection could reportedly bring in an estimated $15 million or more.

Part of the problem lies with vendors who import cigars from Florida where there is no tax, and selling them in Georgia where they keep the 23-cent tax they should be forwarding to the State of Georgia, according to testimony before the subcommittee.

"If you are buying from another state with a lower tax than Georgia, then you are scamming the system," said Sen. Hardie Davis (D-Augusta).

However, according to the news report, not everyone agrees on the right solution. Lobbyists for retailers and wholesalers that mostly market just in Georgia argued for some type of digital stamp on individual cigars. But lobbyists for wholesalers who distribute in multiple states objected that requiring them to stamp cigars would increase their costs and would not be effective. Those lobbyists argues for more tax auditors.

"This is additional regulations on these businesses," said Bruce Bowers, lobbyist for the Southern Association of Wholesale Distributors.

Still others are calling for both the individual stamps and added auditors. Subcommittee Chairman David Shafer (R-Duluth) predicted his committee would yield to the administration. "The action has to be at the Department of Revenue level," he said.

Also, any tax legislation has to begin in the House of Representatives. Smoking opponents are hoping there will be a bill because it could be amended to include a $1 increase in the cigarette tax, the news outlet said.