Tag Archives: cigarette

Bill Lets Cigarette Retailers Make More Profit By Raising Prices

Legislation allowing cigarette retailers to raise prices — by 32 cents per pack according to a legislative staff estimate — has cleared its first committee.
The bill by Rep. Matthew Hill, R-Jonesborough, deals with a current state law setting a minimum price for cigarettes. Hill told colleagues that has led to “large out-of-state cigarette manufacturers” requiring by contract that their products be sold at that price, costing retailers “hundreds of thousands if not millions of potential revenue” that could be realized by raising prices.
The Fiscal Review Committee staff calculated that the average price of a pack of cigarettes is currently about $5 in Tennessee and that the bill, if enacted, would let retailers charge an extra 32 cents per pack. It is further calculated that the higher price will drive down consumption so that the state loses about $1.4 million in annual revenue that it would otherwise receive from sales and tobacco taxes.
Because of complicated tax provisions interacting with the law on “state-shared revenue,” however, the Fiscal Review staff figures that local governments will actually receive more money if the law is changed to raise prices, even if cigarette sales drop as predicted.
Current law says retailers can sell cigarettes at no more than 8 percent above the price they pay to get them. The bill (HB644) would raise the ceiling to 15 percent above their cost. It is being pushed by lobbyists for convenience stores.
It was approved by the House Agriculture Committee last week and faces its first Senate committee vote this week.

Senate Approves ‘Roll-Your-Own’ Tax Bill

The Senate has approved legislation that would increase taxes on cigarettes made with “roll-your-own” machines to more closely align with taxes on packaged cigarettes.
The sponsor of SB1738, Republican Sen. Jack Johnson of Franklin, said it is a “matter of simple fairness” to the manufacturers and sellers of regular cigarettes. As things stand now, he said, a 10-pack carton of roll-your-own cigarettes, processed in about eight minutes with a machine, goes for about $25 compared to about $50 for manufactured cigarettes.
Much of the Senate floor debate was devoted to when the proposed new law – which still needs House approval — should take effect. Ultimately, the senators settled on July 1, 2013. The bill was then approved 25-5.
Johnson said the delay would allow businesses owning the cigarette processing machines – 85 of them statewide at last count – a reasonable time to prepare for compliance with the change in law.

Feds Fight Roll-Your-Own Cigarette Shops, TN Does Not

Federal officials are trying to impose new regulations through legal action on shops that allow customers to make their own cigarettes on location, but Tennessee Department of Revenue officials are not making any similar moves against the practice, reports The Tennessean.
The do-it-yourself approach saves the smokers the 62 cents per 20-pack state cigarette tax and the $1.01 per pack federal cigarette tax. The new wave of cigarette technology has already prompted a federal court case, but smokers are singing the praises of the RYO machines, which have been under the state government’s radar until recently.
(Customer Lawrence) Davis pays $24 for 200 cigarettes, about half price.
“It’s a better, milder taste,” he said. “I know it’s bad for me, but I love it. I never thought about quitting, but when prices started going up the roof, I was looking for a cheaper way.” RYO Machine Rental LLC provides that cheaper option in 38 U.S. States.
In only its third year, the company has grown from a handful of machines in Girard, Ohio, to about 1,500 across the country.
…In Tennessee, those shop owners are required to be licensed to distribute tobacco, purchase from a licensed tobacco wholesaler, and pay the 6.6 percent state tobacco tax in addition to other business permitting and taxing, said Billy Trout, Tennessee Department of Revenue spokesman. The tobacco tax, along with the tobacco, tubes and rental of the RYO machine, is factored into the customer’s purchase price.
The state revenue department currently has no concerns about RYO businesses’ taxation or regulations, Trout said.