Smokers able to dodge tax changes
Von buycigarettes, 14:40Tax changes have boosted national pipe tobacco sales by 840 percent in the past three years, leading to calls for equalizing federal taxes for all tobacco products and creating a robust market for do-it-yourself cigarette-rolling machines. The April 2009 tax changes caused more smokers to buy pipe tobacco for rolling cigarettes, which they call “sticks.” At the same time, the demand for now-heavily taxed “roll-your-own” tobacco plummeted.
To make those cigarettes, more smokers are using a machine developed and produced in the Youngstown area. A user inserts tobacco and cigarette tubes into the “RYO Filling Station” to avoid buying packaged cigarettes. Tobacco taxes affect Ohio’s estimated 1.7 million smokers. In 2010, the Centers for Disease Control and Prevention ranked Ohio 35th nationally with an adult smoking rate of 20.1 percent.
The state’s 12.9 percent youth (ages 12-17) smoking rate is 46th in the U.S. The Government Accountability Office, which recently released a report on the 2009 tax changes, suggests that the country follow Ohio’s method of equalizing taxes. In Ohio, all noncigarette tobacco products are taxed at 17 percent of the wholesale price, although the American Lung Association in Ohio has been asking lawmakers to significantly increase that rate.
The GAO said it would like to see RYO and pipe tobacco taxed at the same rate. Currently, RYO tobacco is federally taxed at $24.78 per pound, compared with pipe tobacco’s $2.83 per pound. Meanwhile, critics of the RYO machine are asking for the machine-rolled cigarettes to be taxed for production, which would end their economic advantage. The machines have been controversial enough in the smoking world that multiple local shop owners who offer them declined to comment.
The change in buying patterns doesn’t have as strong of an effect on Ohio because of its flat tax rate on all non-cigarette tobacco products. However, local tobacco outlet operators said they have seen more customers drive to Pennsylvania and buy tobacco products in bulk because it is the only state that doesn’t tax snuff, chewing and smoking tobacco or large cigars.
It’s easy for tobacco companies to help customers avoid some taxes, tobacco enthusiasts said. According to the Alcohol and Tobacco Tax and Trade Bureau, little more is necessary than changes in packaging and labeling to change RYO tobacco to the lesser-taxed pipe tobacco.
“In pipe tobacco, you’re generally enjoying the aroma and some flavor,” said Jason Clyburn, manager at The Wharf tobacco shop in Beavercreek. “The roll-your-own, they have their own pipe cut, and basically it’s regular cigarette tobacco with a bigger, heavier, leafy cut, the way a traditional pipe tobacco has. That’s how they’re skating around the (RYO taxes).”