The House Taxes Committee considered a sharp reduction in the tax on so-called premium cigars Thursday.
Rep. Jim Nash, R-Waconia, the chief author of the bill, called it a "crushing" tax on local purveyors of fine cigars and their customers.
Cigar store owners testified that their customers are fleeing to stores in neighboring states and the Internet to find better prices.
Premium cigars, which do not include cheaper products like Swisher Sweets, are currently taxed at 95 percent of the wholesale price, topping out at $3.50 per cigar. The Nash bill would lower the tax to 50 cents per cigar.
The bill was met with resistance from anti-tobacco activists.
“Raising the price of tobacco reduced smoking to record lows in Minnesota by motivating smokers to quit and keeping kids from picking up the habit,” said Janelle Waldock, Vice President of Community Health and Health Equity at Blue Cross and Blue Shield of Minnesota and co-chair of Minnesotans for a Smoke-Free Generation.
Adult smoking rates declined from 16.1 percent to 14.4. percent, while youth smoking dropped from 18.1 percent to 10.6 percent after recent tobacco tax increases, according to ClearWay Minnesota, an anti-tobacco advocacy.
Public health and economic studies have repeatedly shown that higher prices are correlated with lower rates of smoking.
The bill will be considered as part of a larger tax package later in the legislative session.