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CIGARETTES: Most retailers favor RYO taxes

Letter by Jan Teague, Olympia on April 5, 2012 at 9:07 am | 8 Comments »
April 5, 2012 10:12 am

The headline on an April 2 article regarding “roll-your-own” (RYO) tobacco shops says, “Roll-your-own smokes tax has retailers fuming.”

Retailers we collectively represent are not “fuming” about the current proposal before the Legislature. We support it. The only “retailers” not supporting it are the outlets for cheap cigarettes that have taken advantage of a tax loophole.

Legitimate retailers such as grocery stores, convenience stores and gas stations currently sell cigarettes with tax stamps and collect the proper state and federal taxes. For many convenience stores, cigarette sales can be upwards of 30 percent of their total annual revenue.

While these stores are losing sales to RYO locations, Washington state is also losing valuable revenue. According to official fiscal notes, the estimated revenue loss to the state ranges from $12 million to $20 million per year based on 65 RYO locations currently operating in the state.

When the federal government raised tobacco taxes in 2009, tobacco companies began producing loose-leaf cigarette tobacco and mislabeled their product as “pipe tobacco” in order to avoid the higher federal tax. Companies like RYO Filling Station sprung up to take advantage of this 10-to-1 tax differential

We encourage the Legislature to pass 2SB 2565, creating a level playing field for legitimate retailers and providing the state with much-needed revenue.

(Teague is the president and CEO of the Washington Retail Association. Also signing the letter are Jeannie Lee, executive director of the Korean-American Grocers of Washington, and Joe Gilliam, president of the Northwest Grocery Association.)

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