Business, Government Legal News from throughout WVWV Senate committee moves roll-your-own cigarette tax bill

What some people have described as a bill that would level the playing field for all cigarette sellers could generate between $500,000 and $750,000 in revenue.

Senate Bill 514 takes aim at establishments with roll-your-own cigarette machines. It would classify them as cigarette manufacturers and require them to pay the state excise tax.

West Virginia Oil Marketers and Grocers Association President Jan Vineyard told Senate Health and Human Resources Committee members Tuesday that her organization has been working with the State Tax Department to get those businesses to file state taxes.

Mark Muchow with the Department of Revenue said the $500,000 to $750,000 estimate is what they think is currently being lost, based on a market share penetration of 2 percent, because there are only 15 businesses with roll-your-own cigarette machines in West Virginia right now.

Chuck Hamsher, a spokesperson for the American Heart Association said Arkansas banned roll-your-own cigarette machines last year, and his organization would like to see the same thing happen in West Virginia.

Hamsher said the businesses sell cigarettes at a steep discount because the tobacco is classified as pipe tobacco which is taxed at nearly half the rate of cigarettes.

"Our main concern is there are cheap tobacco products in the marketplace, and it encourages people to continue a deadly habit," Hamsher told legislators.

Wendel Turner, with Turner & Johns PLLC in Charleston, said he is a lobbyist for tobacco manufacturers, and roll-your-own cigarette machines are set up to avoid cigarette taxes. He said the measure would classify businesses with the machines as cigarette manufacturers, requiring them to fall in line with state taxes and the master settlement plan that forces payments to support bonds the state currently has out and it would require them to use fire-safe paper.

Turner said litigation is pending in Ohio to require federal excise tax to be charged to roll-your-own cigarette businesses.

"The expectation is that the federal government will do its part," he said. "The pending federal litigation is at the Circuit Court level and should be argued this summer."

Sen. Dan Foster, D-Kanawha, who is a physician, proposed an amendment suggested by Hamsher and the Heart Association, to completely ban the roll-your-own cigarette machines.

"Obviously as a physician, I am interested in public health," Foster said. "I think the adoption of this amendment would decrease the prevalence of smoking and ultimately save the state money in chronic diseases from smoking.

"Any loss of revenue from the taxes would be overwhelmed in future years with health care coasts."

Foster's amendment failed and the bill was passed by the committee. It will be debated in the Senate Finance Committee before it could be heard by the full Senate.