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New bill adds taxes to cheap cigarettes

A bill that sits on the desk of Washington State Governor Christine Gregoire could sound the death knell for a few local businesses once signed into law.

House Bill 2565, a bill taxing establishments that operate roll-your-own cigarette machines, passed through the State Legislature in the 2012 legislative session.

The bill requires owners of bulk cigarette rolling machines to purchase manufacturing stamps. The stamps will effectively increase the cost of 200 cigarettes by $20.25, said Casey Kroesser.

Kroesser owns DIY Tobacco in downtown Port Orchard and two other stores in Silverdale and Bremerton. Currently, a carton of smokes rolled through one of the large brown and black machines at her stores costs $32, about 50 percent less expensive than a brand-name carton from a convenience store or gas station.

Assuming the bill is signed, the cost of 200 roll-you-own cigarettes from a machine will raise to nearly the price of the brand names, Kroesser said.

“We’ll still have savings,” she said. “But it puts us right even with the completes.”

The problem with only marginal savings from her stores, she said, is that she doesn’t know how many of her customers will continue to wait in front of her roll-your-own machines. With savings of only $9.75 a carton, she’s afraid her customers will choose convenience over price, putting her three stores and 12 employees at risk.

Kroesser said her store was unfairly targeted for taxation. The cigarettes are rolled, she argued. She is not a manufacturer who should purchase manufacturing stamps meant for Big Tobacco.

Port Orchard Resident Bill Cramer visits DIY Tobacco a couple of times a month. He goes to the store to save money. While the tax hike won’t drive him away, he said, it will affect him.

“I’m on SSI (Social Security Insurance),” he said. “It’s going to hurt me big time.”

Rick Gars, a South Kitsap Resident, buys about 1200 cigarettes a month. The government loves to find a way to tax lower income individuals, he said. Instead of looking within bureaucracy and eliminating some higher up government positions, the government finds various ways to tax the legislature. A shipyard worker, Gars said it’s blue color guys like himself that see the brunt of taxation, he said.

“I know it’s a bad habit. But they don’t make it cheap to quit, either.”

Senator Karen Keiser, D-Kent, co-sponsored the corresponding Senate bill. The chair of the Health and Long-Term Care committee, Keiser understood that a heavy tax could put local establishment out of business, but told the Independent in February that stopping the proliferation of tobacco was more important than local businesses that operate the machines.

“I’m sorry if they’ve built an entire business solely around a product that is an addictive, health-harming product,” she said. “That was their choice.”

The Kitsap Public Health District Medical Director, Scott Lingquist, said the public health district had no official stance on the bill. The public health district tries to discourage smoking, he said, recognizing that healthcare costs would decrease as the prevalence of smoking falls.

“Tabacco is tobacco no matter if you are buying a carton or rolling your own,” he said.

Both Kroesser and Gars agree that taxation won’t stop at the roll-your-own store.

“They’ll tax us out of existence,” she said. “Then they will turn to anything else they can tax.”

For now, Kroesser will focus on how to keep her store in business once the tax is levied. She will consider moving away from the bulk rolling machines and towards personalized, smaller products.

She holds out hopes that loyal customers will keep her in business. But she isn’t sure.

“When you look at busy people now a days who can almost pay the same price for a carton as a roll-your-own, it’s not hard to find out what people are going to do,” she said.

 

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