State-mandated enforcement of a manufacturer tax on roll-your-own cigarette tobacco stores was halted by a Dane County judge last week.
The RYO stores sell tubes and tobacco, and then rents the RYO machines in the stores to customers that the consumers themselves can produce cigarettes, according to Robert Petersen, the owner of Rib Mountain Tobacco and Liquor.
Petersen, along with other RYO store owners, filed the lawsuit.
The Wisconsin Department of Revenue sent a notice to RYO stores Sept. 23 explaining the stores would now be counted as manufacturers and distributors of tobacco, according to a DOR statement. This would require the stores to pay the state taxes already being paid by tobacco manufacturers in the state.
DOR spokesperson Stephanie Marquis said Dane County Judge Juan Colas ruled in favor of the stores on Oct. 7 to place a temporary restraining order on the new enforcement. She added there will be another hearing Nov. 23 to decide whether the current restraining order will be continued or lifted.
Marquis said the DOR enforcements were crafted to make the tax code fair.
“Obviously, there is some lost revenue in the difference of what RYO stores would pay without the new regulation, but the original intent was to enforce the law equitably and consistently,” she said. “Other stores across the state have contacted us and told us they can’t compete with these RYO stores.”
Rep. Evan Wynn, R-Whitewater, said he was already working on legislation that would have the same effect as the DOR enforcements, adding that he was “more than willing” to continue working on it if the restraining order is maintained.
Regardless of the restraining order’s fate, Wynn said he supports the DOR enforcements.
“I campaigned on no new taxes and no tax increases. I don’t see this as a new tax,” he said. “Ninety-five percent of the marketplace is paying that tax, but this 5 percent have created machines to circumvent the revenue laws that regulate tobacco.”
Petersen said cigarettes produced in RYO stores are healthier than those produced by other tobacco companies.
He said the tubes he imports from other nations are registered with the Food and Drug Administration and the tobacco he sells is chemical free.
Steve Elliott, a spokesperson for SmokeFree WI, disagreed with the claim that RYO-produced cigarettes are healthier.
“That is a claim that the retailers make and is strictly prohibited by the FDA. There is no evidence to suggest they are healthier,” Elliott said.
Elliott said that because RYO-produced cigarettes are less expensive, people buy more cigarettes there.
He said placing a tax onto RYO stores would make their cigarettes more expensive, therefore preventing people from smoking.
“The evidence shows that over the last ten years, as Wisconsin’s cigarette tax has increased, we have seen youth consumption cut in half. It strongly discourages young people from starting smoking and encourages people to quit,” Elliott said.