By Timothy S. Donahue
Top Takeaways:
Tax proposal: Missouri lawmakers proposed legislation to raise taxes on cigarettes, cigars, and vaping products.
Veteran benefit: Revenue would provide property tax relief for disabled veterans and Gold Star families.
Cigar impact: The proposal would increase the state’s cigar tax rate from 10% to 12% of the wholesale price.
Missouri lawmakers have proposed legislation to increase taxes on cigarettes, cigars, and vaping products to provide property tax relief for disabled veterans and Gold Star families.
The proposal, titled the Veterans and Gold Star Family Property Tax Relief Act, was introduced by Rep. Don Mayhew, R-Crocker, and Rep. Bill Lucas, R-De Soto. Instead of mainly framing the measure as a public health initiative, the legislation allocates the additional tobacco tax revenue to homestead property tax exemptions for qualifying veterans and their families.
Under the bill, Missouri’s tobacco taxes would go up by half a cent per cigarette, 2% of the wholesale price on other tobacco products, including cigars, and 10% of the wholesale price on vapor products. Missouri currently taxes cigars and other tobacco products at 10% of the wholesale price. If passed, the proposal would raise that rate to 12%.
Industry observers note that the increase would have a relatively small retail effect. For example, a cigar with a suggested retail price of $9.50, currently selling for about $9.98 before sales tax, could go up to roughly $10.07, based on estimates.
The bill proposes three levels of property tax relief based on veterans’ disability ratings. Veterans with ratings from 30% to 50% would get exemptions between $3,000 and $5,000, while those rated 50% to 70% or recipients of the Purple Heart could qualify for $5,000 to $10,000 in property tax relief.
Veterans with disability ratings of 70% or higher, along with Gold Star spouses, would qualify for a full property tax exemption under the proposal.
The legislation also includes survivor provisions that allow a qualifying veteran’s spouse to keep receiving the exemption if the veteran dies, as long as the spouse stays unmarried and continues to own the property.
The bill received a public hearing last week in the Missouri legislature and currently has two sponsors. It remains at an early stage of the legislative process.
