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MSRP/ Tax Question

tomthirtysix

tomthirtysix

Wishing I was as cool as Phil
Joined
Dec 27, 2006
Messages
7,092
Location
Upstate NY
OK.. I tried search, but didn't come up with anything, so I figured I would just ask. When factoring in state tobacco tax in the price of cigars, is it added to the MSRP of the cigar?

For example, if I'm buying a cigar with an MSRP of $10, is it normal for me to see it in NY (37% tobacco tax) for $13.70? Then the sales tax is added on at the register, I know. But I'm trying to get an idea of what kind of prices I should be looking at inside the store.
 
One thing I would say is, to the best of my understanding, state taxes are applied to the wholesale cost not MSRP. I see moki looking at this thread too and I am sure he will have more of significance to say...

edited to spell more gooder
 
tomthirtysix said:
OK.. I tried search, but didn't come up with anything, so I figured I would just ask. When factoring in state tobacco tax in the price of cigars, is it added to the MSRP of the cigar?

For example, if I'm buying a cigar with an MSRP of $10, is it normal for me to see it in NY (37% tobacco tax) for $13.70? Then the sales tax is added on at the register, I know. But I'm trying to get an idea of what kind of prices I should be looking at inside the store.
Click to expand...

Yes...in California for instance, that is how it is done... The Store owner has to pay the State Tobacoo Tax up front that is on the invoice...so the price you see on the shelf is supposed to include the tobacco tax. Then at the register, the store adds the state sales tax...double wammy!

-Fetter
 
Takes are applied in many different ways. In some states it's against the retail price. In others, it's a percentage of wholesale.

There is no hard and fast rule. You just have to find out what the policy in each state is.

Wilkey
 
Ginseng said:
Takes are applied in many different ways. In some states it's against the retail price. In others, it's a percentage of wholesale.

There is no hard and fast rule. You just have to find out what the policy in each state is.

Wilkey
Click to expand...

OK.. so the NY tax is "37% of the Wholesale Price" according to the chart on vitolas.net. So depending on what the wholesale of each particular cigar is, that determines how close to MSRP I would pay for that cigar (plus the markup, of course).

What made me first think about it was the local B&M I go to had Cuban Beli's for $7.55, which is just about 50% over MSRP. So, I was thinking, factor in the 37% tobacco tax and the premium isn't too bad. But then I started looking at other (non-Fuente) cigars, and they were priced at MSRP.

Edit: I'm not sure if the B&M is an authorized Fuente dealer. The owner's old location was. He has since sold and moved here, so I'm not sure if it transferred or not. But his old shop is still listed on cigarfamily.com
 
As stated the price on the shelf is suppose to replect the tax included. Depending on the state you really can not go with the msrp on a site and then go looking for the stick in California, or some other state with high taxes on tobbaco the can reflect a huge increase in price on a cigar. But again to some retailers take advantage and use it to help justify gouging there prices.
 
Some of the B&Ms I go to don't charge state sales tax when I pay with cash. The tobacco tax is already included in the price of the stick. It is difficult to guage one store from another based upon a price comparison, as B&Ms also charge extra just because of the rent in the area.

For authorized dealers, I usually go to their respective websites and search for stores near me. $7.55 for a Cuban Beli is a bit high, seeing as how the bonitasmokeshop.com has a box for $102.00.
 
Ginseng said:
Takes are applied in many different ways. In some states it's against the retail price. In others, it's a percentage of wholesale.

There is no hard and fast rule. You just have to find out what the policy in each state is.

Wilkey
Click to expand...

Is this a typo -> "takes", appropriate name either way :laugh:

Brian
 
I can understand supporting your local shop, but mine is ridiculously expensive compared to online prices with the high tax in NJ. Plus they're too busy peddling their store wrapped cigars, which, frankly aren't that good....so I think I'm going to be sticking to bundles here or online stores.
 
Here in WV the tobacco tax is 7% and is added onto the price of the cigar before purchase.
 
Let's not confuse all the different taxes here! There are usually two taxes paid- state tobacco tax and state sales tax.
Since it's not a "trade secret", it is pretty widely known that MSRP is generally a keystone price from wholesale (100% markup or 50% margin).
Most states base their tobacco tax on wholesale price. In Georgia, the tobacco tax is 23% of wholesale on cigars. Tobacco tax is paid to the state when inventory is received (I have until the 10th of the following month to pay).
So, tobacco tax is actually a "cost of goods" item and some cigar shops will markup the taxes as well (I don't).
Here's an illustration:

Wholesale price of a cigar is $10.00 (which means MSRP is usually $20.00)
In Georgia, tobacco tax is 23% or $2.30, so the stick actually costs the retailer $12.30.
The stick is on the shelf for $22.30, or $24.60 if the retailer marks up the tobacco tax.
Once you get to the register, remember to add state sales tax (7% here), so you'll pay $23.86, or $26.32 for that $10.00 wholesale stick at the B&M.

Of course you can go online (to an out of state shop) and screw your state out of the taxes. Don't complain about the other taxes (like property tax, gas tax, etc) going up though, as the state will get back their money somewhere!

Jim
 
Tenpin said:
Let's not confuse all the different taxes here! There are usually two taxes paid- state tobacco tax and state sales tax.
Since it's not a "trade secret", it is pretty widely known that MSRP is generally a keystone price from wholesale (100% markup or 50% margin).
Most states base their tobacco tax on wholesale price. In Georgia, the tobacco tax is 23% of wholesale on cigars. Tobacco tax is paid to the state when inventory is received (I have until the 10th of the following month to pay).
So, tobacco tax is actually a "cost of goods" item and some cigar shops will markup the taxes as well (I don't).
Here's an illustration:

Wholesale price of a cigar is $10.00 (which means MSRP is usually $20.00)
In Georgia, tobacco tax is 23% or $2.30, so the stick actually costs the retailer $12.30.
The stick is on the shelf for $22.30, or $24.60 if the retailer marks up the tobacco tax.
Once you get to the register, remember to add state sales tax (7% here), so you'll pay $23.86, or $26.32 for that $10.00 wholesale stick at the B&M.

Of course you can go online (to an out of state shop) and screw your state out of the taxes. Don't complain about the other taxes (like property tax, gas tax, etc) going up though, as the state will get back their money somewhere!

Jim
Click to expand...

Question. How does one become a wholesaler?? :rolleyes:
 
Saxjazzman said:
Tenpin said:
Let's not confuse all the different taxes here! There are usually two taxes paid- state tobacco tax and state sales tax.
Since it's not a "trade secret", it is pretty widely known that MSRP is generally a keystone price from wholesale (100% markup or 50% margin).
Most states base their tobacco tax on wholesale price. In Georgia, the tobacco tax is 23% of wholesale on cigars. Tobacco tax is paid to the state when inventory is received (I have until the 10th of the following month to pay).
So, tobacco tax is actually a "cost of goods" item and some cigar shops will markup the taxes as well (I don't).
Here's an illustration:

Wholesale price of a cigar is $10.00 (which means MSRP is usually $20.00)
In Georgia, tobacco tax is 23% or $2.30, so the stick actually costs the retailer $12.30.
The stick is on the shelf for $22.30, or $24.60 if the retailer marks up the tobacco tax.
Once you get to the register, remember to add state sales tax (7% here), so you'll pay $23.86, or $26.32 for that $10.00 wholesale stick at the B&M.

Of course you can go online (to an out of state shop) and screw your state out of the taxes. Don't complain about the other taxes (like property tax, gas tax, etc) going up though, as the state will get back their money somewhere!

Jim
Click to expand...

Question. How does one become a wholesaler?? :rolleyes:
Click to expand...

Depends on the state and the distributor(s) you want to deal with.

In Georgia, I set up my company (an LLC), got my Federal EIN, a business license, resale license and tobacco sales permit.
Then I set up accounts with the distributors (some are easier to establish than others).

Jim
 
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