Revenue starts detailing cigarette tax hike

The Minnesota Department of Revenue is sending reminders to retailers selling cigarettes that they’ll have to inventory their products on July 1, and pay the higher tax on those products. The state’s cigarette tax is going up by $1.60 to $2.83 a pack on July 1.

The tax hike is a part of an overall budget deal reached by Gov. Dayton and DFL legislative leaders. In a conference call with reporters, Revenue Commissioner Myron Frans says retailers will have to pay the higher tax on any products on their shelves on that day.

“They’re going to have to take an inventory on July 1, because that’s when the new tax goes into effect,” Frans said. “They’ll be required to file a return shortly thereafter, I think it’s July 11, and they’ll have until September 4th to make a payment on the tax on the inventory that they had as of July 1.”

The tax is expected to generate $24.5 million for the state, which will be dedicated to the new Vikings stadium.

Gov. Dayton is relying on that tax and closing a so-called corporate tax loophole to finance the stadium. He took the action after revenue from electronic pull-tabs failed to materialize.