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Tax Hike On Roll-Your-Own Tobacco Shops Could Provide Boost For E Cigarette Industry
The recently passed transportation bill H.R. 4348 has “roll-your-own” tobacco shop owners and consumers fuming.
The new legislation states that shops operating under this current business model will no longer have the luxury of being classified for tax purposes as pipe tobacco resellers.
The tobacco shops coming under fire from the legislative amendment use machines that assist the purchaser in rolling their own smoke, right in store. The machines can roll 20 cigarettes a minute, equal to one pack of cigarettes.
Instead of turning back to traditional tobacco, Matt Steingraber, founder of White Cloud Electronic Cigarettes, hopes the change brings more consumers to e cigarettes, and less to tobacco smoke.
“Smokers currently saving money by rolling their own cigarettes, will still have an opportunity to save even more money with e cigs,” said Steingraber.
Recent studies by UBS and Wells Fargo highlighted a staggering difference in annual costs between tobacco and electronic cigarettes. The financial advisors noted in the reports that the average consumer saves almost $1,400 by switching to e cigs.
“We’re giving tobacco smokers a cheaper, healthier alternative,”
President Obama ratified the tax increase, which allocates more than $100 billion for highways, mass transit and other miscellaneous transportation initiatives, earlier this month.
“We are very disappointed in the recent legislative initiative to limit our business model,” said RYO Machine’s president Phil Accordino in a statement made on the company’s Web site.
In a recent Huffington Post article, Accordino said he feels the changes were made to benefit big tobacco in their efforts to eradicate anything resembling a competitor on the scene.
The affected shops have been operating under this tax loophole since 2009.
As for the manufacturers of the self-rolling machines, the tax change might spell the end.