According to a press release from the International Premium Cigar and Pipe Retailers Association, this is the breakdown on the new taxes as passed in the House:
SCHIP Legislation Details
The new tax rates are effective April 1, 2009;
The cigarette tax rate goes from $.39 per pack to $1.00 per pack;
The tax on snuff goes from $.585 per pound to $1.50 per pound;
The tax on pipe tobacco goes from $1.0969 per pound to $2.8126 per pound;
The tax on RYO goes from $1.0969 per pound to $24.62 per pound (not a typo).
Additionally the definition of RYO has been expanded to include cigar wrappers to address the “blunt wraps” issue;
The tax change to small cigars (cigars weighing less the three (3) pounds per thousand will be phased in over five (5) years at the following rates per year:
2009 & 2010 - $.25 per pack
2011 & 2012 - $.50 per pack
2013 & 2014 - $.75 per pack
2015 and beyond - $1.00 per pack
We were successful in continuing to have the floor tax NOT apply to large cigars; however it does pertain to any other tobacco products.
As expected, cigarette smokers will see see their federal tax rates more than double. It looks like people who roll their own cigarettes are going to be hit even harder though: $1.10 per pound to $24.62 per pound! That is an insane tax increase. I’m unsure as yet what the impact of the floor tax will be.
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Jacob Grier is a freelance writer, barista, mixologist, and magician in Portland, OR. He writes, eats, and drinks a lot. His articles have appeared in The Washington Post, Reason Online, The Oregonian, and other publications.
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*sniff* *sniff*
Anybody else smell a coming surge in the black markets?
Does anyone know what the “justification” for that RYO tax increase is? Not surprised on the blunt wraps bit, but is there some naughty thing I don’t know about loose tobacco? Or is it just too cheap to be sufficiently unattractive?
Ugh. Ugh.
One could argue that rolled, unfiltered cigarettes are more dangerous and therefore deserved to be taxed more, but I think that’s giving Congress too much credit. It probably just comes down to cigarette and cigar companies have lobbyists and loose tobacco companies don’t.
Re: RYO tax - I’ve often heard stories of people who turned to rolling their own especially in places like NYC with absurd local/state taxes, since it was not taxed as heavily.
From the quote above, at a dollar a pack, the tax per cigarette is a nickel.
If you trust the numbers on this page:
http://wiki.answers.com/Q/What_does_a_pack_of_cigarettes_weigh
that puts a pound of RYO at ~600 cigarettes, this increase places the tax per rolled cigarette at around 4 cents, 20% behind manufactured ones. (though I’m not sure if there’s a tax on papers/shells/wraps/whatever that makes up for that gap)
It seems to me they’re basically just chasing tobacco consumers around to make sure they get the money that they projected they’d get. People ran to RYO, the tax followed them.
Maybe the real purpose is to make smoking and everything that goes with it so prohibitively expensive that no one can afford to smoke, thus forcing people to become healthy. What a novel approach to getting people to quit.
The real reason for this bill has nothing to do with health care and everything to do with Philip Morris trying to put small manufacturers of RYO tobacco. PM is losing smokers to RYO and is one of the backers of this bill. Write your Senator today and ask them to vote against this cynical piece of legislation. Their phone numbers and emails are listed at http://www.senate.gov
I’m a RYOr. I started it when I went to the organic tobacco. I was buying the pre rolled American Spirit which were about $15 to $20 more for a carton then contaminated brands. Then I decided to RYO. I did this to decrease my usage. I NEVER pre roll. It worked. Then the increases in NY took effect last year. It didn’t affect me then. Point is, I was willling to pay the extra $ for my smoke. My decision to roll was not economical. But………2100% tax increase is insane!
Booze is bad for you. Hamburgers are bad for you. Why hit smokers? And……notice premium cigars are not affected. What’s up with that?!