RYO taxes – over enthusiastic?

Tough call trying to shoot down Schip legislation – when the program is designed to provide help to under-privileged children without health care. Nevertheless, the RYO – or Roll-Your-Own – sector is, when all’s said and done, being unfairly targeted for tax increases.

Right now the tax rate is a modest $1.09/lb – not so bad, but in many respects a pragmatic level of taxation given that many RYO users are not your highest income earners either. So its all the more galling to see the RYO tax increases within the Schip proram to $24.62/lb – A whopping 2,145% increase. Where did this come from? And what was the rationale? Who in the world thought this one up?

If passed at this level the tax will entirely alter the RYO landscape.  Could this be another case of unintended consequences?

Anchoring a Federal Children’s Health Program on variable tax income doesn’t sound like good fiscal policy.

24 comments ↓

#1 See store manager on 01.29.09 at 4:32 PM

One guess, Altria.

#2 Brave heart on 01.29.09 at 6:55 PM

It will really be a shame to see this business be attacked at such an extraordinary level. I know of several very fine retail locations that specialize in the premium side of this business. It will surely be detrimental to their business!

#3 ... on 01.30.09 at 8:45 AM

The government has now taxed RYO out of existance. The whole reason people used RYO was for the cost factor. Now with the new taxes RYO will now be as much as buying a carton of cigarettes. Lets not forget the taxes on the tubes which also adds to the cost.

#4 Bill Godshall on 01.30.09 at 1:49 PM

I can’t think of a more logical and fairer taxation policy than taxing RYO tobacco at the same rate as cigarettes, especially since the key reason why RYO sales have increased sharply in the past decade is because they were taxed at a much lower rate than manufactured cigarettes.

SCHIP simply levels the playing field (as well as for little cigars, although that tax hike will be phased in over 6 years), and is supported by cigarette manufacturers and public health advocates.

#5 Big Tuna on 01.30.09 at 6:23 PM

Bill – I disagree as there should be a difference between a finished good and an unfinished good. Plus it obvious you’ve never been to a high end tobacconist or a location that deals with premium tobacco like Custom Blends in York, PA.

#6 jancascade on 02.01.09 at 12:52 AM

My RYO business was all high end. I will sell no RYO in my shop after SCHIP. My state will feel the loss, my customers may seek it online, but the taxes we would have to pay on the new federal taxes would make the price to costly. I will sell no RYO, I refuse to sell the floor sweepings because if is less expensive.

The states need to figure it out, no sin, no taxes.

#7 Brave heart on 02.01.09 at 1:25 AM

Another cash cow for the indian reservation business!

#8 gator on 02.07.09 at 9:54 AM

anybody broke down cost of all tobbaco products /across the board?!

#9 butthead on 02.07.09 at 8:58 PM

It begins with msa settlement, farmers buyout, fet and set taxes. Must I say more.

#10 OTP Kid on 02.17.09 at 3:30 PM

A few comments. First of all, Bill Godshall (make him righteous) has no idea about taxation policy. Copmponents are taxed throughout all industries in a tiered fashion starting at the lowest rate for raw material and at the highest for finished good i.e. raw steel vs. importing a finished automobile.

Most folks have the impression it was Altria, as do I that caused this iridiculous tax. The joke is that Obama, who promised not to increase taxes on anyone making less than 250K signed a bill that increased RYO 2100+% on the poorest people in the nation, he is truly a hypocrit and a piece of garbage.

This country is doomed when people like Obama and Bill Godshall (set you free) set policy.

#11 supercallousSi on 03.01.09 at 2:55 PM

“I can’t think of a more logical and fairer taxation policy than taxing RYO tobacco at the same rate as cigarettes,” When has logic ever been your finer point Bill ? Any fool knows that finished goods will always cost more than their constituent parts.Are you suggesting that smokeless tobacco should be equated to cigarette consumption and then taxed at the same rate ? It’s a rip off and is being done at the behest at PM to stop the transfer of smokers away from their products.I say their products because FDA regulation will promote their products at the expense of all others.They are equally as corrupt as TC in that respect.

#12 OTP Kid on 03.09.09 at 12:02 PM

I hope the bloggers find it as interesting as I do that Godshallsticks his head in the blogs, spouts off some self-serving crap, and then runs away and hides. this only serves to prove 2 things: his cowardness and his indefensible rantings.

#13 Ben C on 03.11.09 at 6:23 AM

In response to SupercallousSi, you’re incorrect. RYO or ROLL YOUR OWN tobacco is NOT the finished product by any sense of the word. Roll your own means manufacturing the cigarettes yourself. Now, under the new policy, I get to WORK to make my cigarette AND pay a tax that is 25x higher than someone that bought a pack instead of making it themselves. This WREAKS of big tobacco lobbying to shut down a leak in pre-made cigarette sales.

Obama, you just turned someone that voted for you into someone that despises you worse than G.W. Nice going.

#14 deborah on 04.02.09 at 12:10 AM

Hang-on, hang-on. I am just as totally pissed as anyone about this, as this has been a HUGE source of savings for hubby and me. But, even with the new tax a carton will still cost me around $20 to roll as opposed to $60 to buy. I wish it would still cost $8 like before, but I am still ahead of the game.

#15 Copenhagen Charlie on 04.02.09 at 10:05 AM

Deborah,

I’d say folks are forgetting that cigs incur other taxes at this point that folks are forgetting like the MSA payments and state taxes which are the real culprit!

#16 RockytheRealist on 04.03.09 at 1:03 PM

Bill, SCHIP with the exception of PM was not supported by cigarette manufacturers.

#17 FEDUP on 04.04.09 at 6:28 PM

Yeah makes me wonder what Bill is thinking when he makes a comment that manufacturers support SCHIP. It’s all a part of the master PM plan raise the costs and raise the price to protect our share! Same old company just worried about one thing – SHARE!!!! Don’t care about the industry or the retailer – JUST DELIVER ME THE SHARE! AND DO IT ALL COSTS! Whatever it takes.

#18 Bill Godshall on 04.06.09 at 4:53 PM

My comments pertained to the SCHIP legislation’s sharp increase in RYO and little cigar tax rates (i.e. to tax those products at the same rate as cigarettes).

#19 RockytheRealist on 04.07.09 at 2:39 PM

Thanks Bill. I agree with that and that PM orchestrated the additional increase in MYO/RYO and little cigars in SCHIP. Just one more way to eliminate competition in the marketplace.

#20 OTP Kid on 04.07.09 at 5:18 PM

Bill, isn’t there some fast food blog you can hook up with and bestow your wisdom upon so our kids don’t grow up obese?

#21 FEDUP on 04.08.09 at 9:51 PM

OTP Kid you crack me up!

#22 epluribusidoicy on 06.24.09 at 3:32 PM

I don’t understand everyone’s hair trigger desire to criticize Pres. Obama for SIGNING (not DEsigning) bills to do with tobacco. You might as well criticize your Chevy dealer for the look of the bumper on your new pickup.

Sure, your dealer could refuse to sell them … but he/she’d be out of business pretty fast.

Vote out the DEsigners, not the signer. It’s idiocy to be a single issue voter, especially on an extremely narrow issue, when it come to president.

#23 OTP Kid on 06.25.09 at 11:07 AM

epluribusanalisy: try the HUffington Post blog, I think your garbage might be more well-received there!

#24 not a socialist on 06.28.12 at 6:18 PM

Really people do you see what is happening Obama once again is pushing our wonderfully free, small government nation into a socialist top heavy governmental society. We are almost between socialistism and communism. Why is it that our freedoms are being infringed upon over and over. If they want to raise taxes do it to everyone!!! don’t hide your motifs they are only pushing this into the RYO because the following of consumers is not large enough to make a difference. Always picking on the small guy!!!

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