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Committee votes to impose full cigarette tax on roll-your-own machines

Should a cigarette from a major manufacturer be taxed the same as a cigarette rolled automatically at a convenience store?

That was the question before the House Finance and Tax Committee Wednesday as they heard a lengthy debate that has pitted entrepreneurs who have capitalized on a loophole in the state’s tobacco tax against Big Tobacco.

The committee voted unanimously to support the bill, by Rep. Mike Horner, R-Kissimmee, which would modify the definition of cigarette manufacturer and impose the same state and federal tax on cigarettes rolled by automated machines beginning in 2014.

“This didn’t exist three years ago,’’ Horner told the committee. “They didn’t come out with a better mousetrap. It’s a tax dodge.”

Horner said that the machines emerged after 2009 when the federal government raised the excise tax on cigarettes by $1.01 and the Florida Legislature raised the cigarette $1 a pack to pay for Medicaid.

The $16 per carton increase suppressed sales, stimulated the gray market, internet cigarette sales and the advent of roll-your-own machines, he said.

At least 110 tobacco shops and convenience stores in the state have emerged to sell loose tobacco, which is cheaper than premium brand cigarettes, and consumers load it into a machine rented at the store. Within minutes, the machine rolls and spits out dozens of cigarettes at half the cost of the pre-packaged products.

But several shop owners and lobbyists for the machines “rented” to smokers to allow them to make their cigarettes vigorously argued they can’t be compared to the tobacco manufacturing giants and taxing them would kill jobs.

“The power to tax is the power to destroy,’’ said Jim Eaton, lobbyist for RYO Machine Rentals and Retailers. “You’re being asked destroy these people’s business based on the premise that they are manufacturing cigarettes and nothing could be further from the truth.”

Scott Bembry, an employee at Johnson and Johnson my boss is not doing anything illegal. He pays his taxes….if we pass  tax that could this out of business I am now a statistic on the unemployment live. I can’t live on unemployment and need can my 8 week old baby.”

But, Horner said, that the tax increase also led to loss of jobs at wholesale distributors, including a company in his district that laid off more than 200 employees.

“This is a zero sum game,’’ Horner said. “This is not economic development. It is killing jobs some place to create jobs elsewhere.”

He said he sympathizes with small business owners who made an investment, played by the rules and therefore gave them a two-year window to comply with the tax.

“With two years, that will get them plenty of time to get out of the lease,’’ he said. “This is highly, highly lucrative business when they are selling cigarettes for half price.”

Comments

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MIKE REED

RYO NOT MANUFACTURING? 3,000,000 CIGARETTES PER YEAR EACH MACHINE! LOOKS LIKE A DUCK, WALKS LIKE A DUCK, QUACKS LIKE A DUCK, IT'S A DUCK. PAY THE TAX YOU ARE PRESENTLY AVOIDING VIA THIS LOOP-HOLE!
MIKE R
TAMPA

Shawn

OK then,....
No more going to the store and buying coffee beans
and grinding them yourself with there machine. Oh, and no more going to the laundry mat to wash your clothes with those Rented washers and dryers...unless you pay the sales tax on the machines of course. Oh, lets not forget we can no longer brew beer at those brew shops that sell you everything to brew beer, Shame on all you tax evaders.

Anne Noel

Just another big tobacco lobbyist raping small business owners!!! Another big corporate take over!! Small business just can't compete!!! My son will lose his job and hopefully not have to go on unemployment!!! The republican term for entitlements!!

Elise

110 businesses in Florida will go under. Employees will go on unemployment. The state will not get their sales tax from these stores any longer. The state, county and city will no longer make money on the licenses. RJ Renolds throwing money at this just to shut us down. So much for this country building from small businesses.

zippy

it has nothing to do with health,they are milking the poor people for more money,why doesnt a bootle of beer cost 300 dollars?booze causes more problems than cigarettes.

The solid truth

So when you get lung cancer, heart disease or need a stoma put in your neck and don't have insurance and have to use tax payer's money to deal with your self inflicted health problems, why should I have to pay for it? I didn't shove a cigarette in your mouth! Pay your taxes so those of us who are taking care of our health don't have to pay for your mistake!

Sherri

Why do we allow our GOVERMENT to TAX us to DEATH?This is America didn't we fight a WAR against taxes-Break away from our mother country in order to give people a FAIR chance to live WITHOUT UNFAIR TAXES!!!PEOPLE OUR WONDERFUL GOVERMENT CONTINUES TO GET COST OF LIVING RAISE...WHEN WAS THE LAST TIME YOU HEARD OF THE GOVERMENT HAVING LAYOFFS...WHEN DID OUR GOVERMENT CUT THEIR BUDGETS TO PUT FOOD ON THEIR TABLES? NEVER..THEY CONTINUE TO SPEND SPEND SPEND.AND WHO IS EXPECTED TO PAY? WE ARE.THEY CONTINUE TO WEAR THEIR $400.00 SUITS AND DRESSES WHILE WE ARE FORCED TO START SHOPPING IN THRIFT STORES! THEY CONTINUE TO EAT STEAK WHILE WE CAN BARELY AFFORD TO EAT TOP RAMEN NOODLES...SOMETHING IS REALLY WRONG WITH THE WAY OUR GOVERMENT HAS BECOME ALL POWERFUL AT THE COST OF ITS PEOPLE...

Dan

I just opened a Roll Your Own tobacco shop in North Port Florida 2 months ago. The Fresh Choice machines in my shop can make about 10 cartons of cigarettes a day. Our customers must sit at the machine and load each tube one at a time. It takes about 45 minuts to roll each carton.
A carton of cigarettes cost $16.95 + 7% sales tax. Everyone says our government went after people making thousands of cigarettes a day. I'm not even close. to that. Now we must close, and two more people will be collecting unemployment, and no tax will be collected at all, and my customers will have to pay $55.00 for a carton of cigarettes.

Angie WIlt

The government now does their thinking impetuously. They have no foresight as to what happens when they take something off the market - no license money, no taxes to collect, etc. They just "decide" that they will do something without regard to ramifications of what they decide. They don't have enough operating money ? Then just tax something else!! While we eat noodles, or potatoes and onions for a main meal because we cannot afford meat, they take away jobs, incomes, and eat expensive food. We MUST get rid of this thinking in government. Next thing will be bootleg cigarettes, wheelchairs, and anything else the gov. has decided to tax. Worst of all, our tax dollars are being sent overseas to help people who want to kill us in the first place!!! Whatever happened to "charity begins at home" ??

Gabriel Ecigs

I agree with Shawn. People buy DIY products to reduce the cost in an ever-inflating economy. Buying cigarettes from a major brand was something you could do if you could afford it where I live. Rolling your own is the easiest way to save money if you are gong to do it yourself. If you are willing to do the work I think it shouldnt be taxed atleast not heavily if at all.

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