Tobacco store owners claim their business would be affected dramatically if Washington lawmakers, desperate to cover $1 billion hole in state budget, would increase taxes for roll-your-own cigarettes.
Supporters of the tax hike say it would close a loophole that unfairly benefits to tobacco-rolling machine industry.
The rolling machines allow smokers roll their own cigarettes using loose tobacco and wrapping paper in cigarettes in nearly 10 minutes, at half price of pre-packaged cigarettes. That’s partially because state excise taxes – 15 cents per every cigarette – are not implied to the roll-your-own cigarettes.
Charles Bertrand runs two Tobacco shops in Washington and says that in case roll-your-own products will be taxed as conventional cigarettes he would have to shut down the business, as people will stop buying do-it-yourself tobacco products.
He admits less expensive alternatives are vital for the customers.
“Most of people coming here are low-income and elderly, they really believe that roll-your-own machines are a blessing for them,” Bertrand said.
However, supporters of increasing the tax on do-it-yourself cigs state the lawmakers should think about public health and fairness.
Democratic Rep. Steve Kirby, sponsor of the House Bill 2565 said that if passed, the bill would tax roll-your-own cigarettes like pre-packaged ones. The bill passed the House, but was not considered by the Senate.
Yet, Gov. Chris Gregoire said last week that she would support passing the cigarette tax to roll-your-owns and that the bill is still there for budget negotiations.
According to the bill, the tax would generate not less than $12 million in revenue for the state just in the first year, and about $13 million each year. Imposing the tax would increase the average price per carton of roll-your-own cigarettes from $34.50 up to $67.60, as the fiscal not states. All other additional taxes, such as occupation taxes, would in most part account for the rise.
Implementing the tax would be an important public health measure, some say.
“We are not reducing people’s addition to tobacco by offering them cheaper alternatives, including roll-your-owns,” Gov. Gregoire said. “… The public health problem is my biggest concern.”
Convenience stores owners also lobbying for the measure. They say they were hit by the 2009 federal tax increase, and now are further affected when customers switch to cheaper alternatives.
“The best answer in this case is to tax roll-your-own stores as if they were selling pre-packaged cigarettes, as that is exactly what they have been doing. … We now have many new companies that found a very wise way to avoid cigarette taxes,” admitted T.K. Bentler, director of the Washington Association of Neighborhood Stores, representing of nearly 4,000 convenience stores. He is also lobbying for Reynolds American, the maker of Camel cigarettes.
“We would shut down our businesses if this bill is approved,” said Joe Baba, the distributor of the roll-your-own machines. “… It’s Big Tobacco doing its best to level up the competition and return their customers.”