Highway bill amendment to help rural counties includes a big hit for small tobacco sellers

The U.S. Senate amended the federal highway bill last week to provide transportation aid to rural counties losing federal timber payments, but tucked away in the amendment is a provision that would "reclassify tobacco shops that offer 'roll-your-own' cigarette machines as 'tobacco manufacturers,' imposing on them new regulations and higher taxes," reports Rosalind Helderman of The Washington Post. The machines allow smokers to buy cigarettes at lower prices, and supporters of the change say they're "trying to crack down on ultra cheap and unregulated cigarettes, which they contend skirt tax and health laws." (Post photo by Scott Neville)

The schools amendment would provide $346 million for road improvements, with the tobacco provision providing $97 million by closing a loophole that supporters say smokers have been using to avoid taxes. Phil Accordino, whose company makes roll-you-own machines, said the case "illustrates how corporate America can quietly use its political influence in Washington to secure wins on the business battlefield." He said he didn't know about the provision until after it was voted on, and that it's a way to but "little tobacco" out of business. Roll-your-own cigarettes are about $30 cheaper per carton than pre-rolled, and Helderman reports the low cost is partly Congress' fault because it recently raised taxes on cigarette tobacco, but not pipe tobacco. Sales of pipe tobacco, which isn't that much different, have risen sevenfold since. (Read more)