LAS VEGAS (KLAS) — Businesses that sell tobacco in Nevada are facing a different tax in January: they’ll have to pay wholesale tax for certain products up front.
En Fuego Cigars and Lounge on Sahara has been welcoming customers through its doors for eight years, and it’s one of the businesses facing the changes.
“Business has been good,” said owner Michael Abdoulah, “I mean, we’ve worked really hard at building a base with the community.”
Abdoulah fears that may come to an end, worrying about a new tobacco tax structure taking effect Jan. 1. It requires business owners to prepay a 30 percent tax rate on “other tobacco products” instead of after the sale or distribution of it.
“I can’t afford to pay 30 percent and have it sit on the shelf,” Abdoulah said. The change will impact how he plans to do future sales. “I’m no longer going to be able to inventory and keep backstock.”
Abdoulah said the potential new tax law is not only beginning to affect cigar shops but also other businesses. It’s affecting local cigar reps.
Abdoulah estimated his upfront tax bill will exceed $50,000, big bucks he predicts may force him to shut his doors.
The Department of Taxation requested the bill to alter the law this legislative session. The department has not yet responded to 8 News Now regarding the reason for the change.