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AIF Supports Closing Unfair Cigarette-Tax Loophole

April 24, 2012 - 6:00pm

Imagine a business thriving in todays economy that does not have to follow the same rules and regulations as similar businesses like it must. While you might think that once exposed, the business would be shut down or be reprimanded, however that is not the case for roll-your-own cigarette manufacturers who are running operations throughout the state and country.

On behalf of Associated Industries of Florida, we support legislation currently before Congress, HR 4134, which would help end the exploitation of a tax loophole to sidestep rules and regulations. Unfortunately, roll-your-own cigarette manufacturing is a growing trend that some retailers have adopted to produce cigarettes at remarkably low rates. Through roll-your-own manufacturing machines these retailers are evading state and federal cigarette taxes that are paid by law-abiding traditional retailers and convenience stores. The proposed legislation is simply a common-sense solution that will require roll-your-own operators which sell these products to compete on a level playing field, thus protecting the thousands of Florida small businesses and their employees, who are required to follow industry rules and regulations.

While AIF supports entrepreneurial spirit, the business model for roll-your-own manufacturing has created an unfair advantage as such operators evade state and federal rules regarding the taxation, distribution and other product regulations that apply to traditional cigarettes. Since consumers operate their retail manufacturing machines to roll their own cigarettes, the retailers falsely claim that they are not manufacturers. This is a deliberately untrue assertion that creates artificially low prices and damages the competitive marketplace.

Not only does retail cigarette manufacturing erode the Master Settlement Agreement payments made to the state, but it threatens the sustainability of traditional retailers who are following the rules. Many of these retailers are members of AIF who have shared their struggle to keep up with the unfair competition that roll-your-own manufacturers pose to the industry. Another disconcerting fact is that these unregulated cigarettes do not comply with state fire standards and are not labeled with the congressionally mandated surgeon general warnings, which are meant to protect consumers.

It is in the best interest of small businesses across Florida and consumers, that we close the loophole on roll-your-own cigarette manufacturing. We urge all Floridians and Floridas congressional delegation to support HR 4134 to protect the states hard-working retailers and the people they employ. The passage of this important legislation will help Florida and the rest of the country resolve this economically damaging situation and allow retail businesses nationwide that follow the rules to continue to grow and thrive.

Tom Feeney is president of the Associated Industries of Florida.

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