Getting around the cigarette tax

March 19th, 2012 by Ken

For a decade or more, cigarettes have been a major source of revenue for Washington State. Not only did our governor, when she was attorney general, get vast sums of money from cigarette manufacturers, but the state relies on cigarette taxes for a major part of its revenue.

Every pack of cigarettes sold in this state carries a $3.02 state tax. That’s on top of a $1.01 federal tax. We’re talking big money.

While the state takes in a great deal of money from cigarette taxes, government officials will tell you that money is not the primary driver for the tax.

The state wants to stop people from smoking, and by using the stick approach, are being effective.

Washington ranks 43rd in the country for smokers. Just over 19 percent of adults in this state smoke. That’s down significantly from a decade ago.

The state’s anti-smoking effort, through rising prices of cigarettes, seems to be working.

But, the high cost of cigarettes has created a new niche market for some businesses. “Roll Your Own” cigarette shops have sprung up all over the country and right here in our state and our own backyard.

These businesses work by allowing people to buy loose tobacco, which is significantly cheaper because it’s not taxed at the cigarette rate. Then, they use the in-house rolling machines to make their own cigarettes.

These machines can spit out a rolled cigarette in a couple of seconds. When customers leave the store they have a carton of rolled cigarettes at half the price.

These shops escape paying the state cigarette tax because they are listed as manufacturers.

There are 70 such “Roll Your Own” cigarette stores in Washington state and a handful right here in Thurston County. It’s estimated that if taxed at the regular cigarette tax rate, that Washington could bring in another $13 million in cigarette tax revenue.

The large tobacco makers have pushed a bill, currently in the legislature, that would tax these “Roll Your Own” places and even the playing field.

Since this is a revenue bill, it’s still alive.

Posted in Business, Government, History, Informational, The Real News

(comments are closed).