One little-known part of the recent state budget deal was a tax on roll-your-own cigarettes. Legislators wanted to bring it in line with the high tax that is already charged on regular, manufactured smokes. Businesses that offer this service say the state’s action is unfair and illegal.
“It’s different because the person is involved in the making of it, so it’s a completely different product,” said Brandon Johnson of Natural Smokes on Capitol Hill.
The roll-your-own industry has been growing in recent years, mostly as a way of getting around the high taxes on regular cigarettes. There are now about 65 roll-your-own outlets around Washington; these are places where you buy raw tobacco of your choice, put it in machine and out pops a carton of cigarettes.
Starting in July, a carton of roll-your-own cigarettes will double in price, from about $40 to about $80.
Some state legislators say this new tax violated Initiative 1053, which requires a supermajority for a tax increase.
“The people said, ‘Two-thirds’ vote of the Legislature while in session to increase a tax or to create a tax,’ ” state Sen. Pam Roach, R-Auburn, said. “It’s an increase if it didn’t exist and now it does.”
But other legislators, who voted for the roll-your-own tax, argue it’s not a new tax at all. “What this does is simply extend an existing tax to a product that is enjoying a tax loophole,” state Sen. Karen Kaiser, D-SeaTac, said. “That was the ruling of the president of the Senate.”
It is true that an extension of an existing tax would be allowed under I-1053, and that’s what supporters say this is. They argue they simply redefined what a cigarette is so that the existing tobacco tax would include non-manufactured products as well.
Store owners are vowing to go to court. They also say that the new tax is unlikely to raise the $12 million in revenue that is expected.
Customers “are concerned about the tax and most of them would go back to rolling their own at home if the tax were put into place,” Johnson said.
But supporters say taxing the growing roll-your-own industry is not just about revenue.“The issue here is a tax loophole,” said Kaiser, “and the tax loophole was going to be used, we thought, for an exponential increase in the sale of cigarettes in our state.”