Roll-Your-Own Cigarettes Crackdown
Cigarette taxes in New York City are as high as it gets: $5.85 per pack. In order to sell cigarettes on the cheap, some shops are attempting to circumvent the tax. The result: A lawsuit by the city.
As reported by USA Today, Island Smokes, a Chinatown cigarette shop, is facing a lawsuit from New York City for evading cigarette taxes. Island Smokes patrons use high-speed cigarette machines to “package loose tobacco and rolling papers into neatly formed cigarettes.” The cigarette shop sells some 10-pack cartons of these “roll-your-own” cigarettes for less than $40. A summary of the “savings”:
Many stores sell customers loose pipe tobacco, which is taxed by the federal government at $2.80 per pound (450 grams), compared with $25 per pound for tobacco made for cigarettes. The shops don’t pay into the cigarette manufacturer trust fund, intended to reimburse government health programs for the cost of treating smoking-related illness. And the packs produced by “roll-your-own” shops are generally also being sold without local tax stamps, which in New York include a $1.50 city tax and a $4.35 state tax.
According to Island Smokes’ attorney, the store is neither selling cigarettes nor manufacturing them. Instead, Island Smokes merely sells loose tobacco and tubes, and the customers are provided access to the rolling machines.
Similar legal disputes over roll-your-own cigarette shops are ongoing in Wisconsin, West Virginia, and New Hampshire.