On February 4, 2009, President Obama (an occasional smoker himself) signed the SCHIP bill into law, thus continuing the government’s war on tobacco.
The federal tax on cigarettes is going up from $.39 a pack to $1.0066 per pack. While the increase will surely hurt the cigarette companies, and ultimately, the cigarette consumer, the real victim here is the roll-your-own (RYO) cigarette tobacco industry. RYO cigarette tobacco has become increasingly popular in recent years, especially as the economy has worsened, as it was cheaper to roll your own cigarettes instead of buying a pack of Marlboros. Staying true to the tradition of big businesses not really favoring less regulation and smaller government, the lobbyist for big cigarette companies sought and received the favor of raising the tax on RYO tobacco from $1.10 per pound to $24.78 per pound!
They certainly got their money’s worth. Not only did they turn their backs on their brethren in the tobacco industry, they essentially made it so that the RYO companies will be put out of business. Not only will it now be more expensive to roll your own cigarettes, and therefore eliminate the entire point of rolling your own, but many retailers and looking to blow out their remaining inventories of RYO tobacco before the $23.68 per pound floor tax takes effect on April 1. After that, many retailers are simply going to keep from ordering any more RYO tobacco and either exit the cigarette business altogether or simply sell packs of cigarettes.
It sounds like my wife needs a friend in Kentucky.