Roll-Your-Own Cigarette Tax Hike Approved

NASHVILLE, Tenn. – A bill raising taxes on cigarettes produced in stores equipped with “roll-your-own machines” was approved as one of the last orders of business in Tennessee’s 107th General Assembly.
The measure, SB1738, cleared the Senate on a 26-5 vote Monday and passed the House 68-22 on Tuesday.
The two chambers were at odds, however, on when the higher taxes should take effect and a House-Senate Conference Committee was set up to resolve the difference. The committee’s compromise, Oct. 1, 2013, was approved by the two chambers Tuesday night about 10 minutes before the legislative session ended for the year.
The measure was pushed by lobbyists for tobacco companies and convenience stores who contended the current lower tax rate for “roll-your-own” cigarettes allows machine operators to sell at about half the price of similar packaged cigarettes, making for an unfair advantage.
The measure was opposed by lobbyists retained by manufacturers and by about 70 businesses now operating “roll-your-own” shops, wherein customers buy loose tobacco and papers to make cigarettes on site. They contended the bill amounted to a tax increase on small businesses and, in some cases, could put them out of business.
The delay in effective date was seen as a compromise that will allow those who have invested in the machines to recover some or all of their investment, according to sponsors Rep. Steve McDaniel, R-Parkers Crossroads, and Sen. Jack Johnson, R-Franklin.

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