The amendment would reclassify tobacco shops that offer the machines as “tobacco manufacturers,” imposing on them new regulations and higher taxes, and it opens a window into the ways of Washington, where the powerful and the connected can sometimes win even before the opposition knows the game is underway.
“This is catastrophic,” was the response of Phil Accordino, whose tiny company builds the roll-your-own cigarette machines in Girard, Ohio, when he heard of the Senate action. Word arrived in Ohio after the amendment had already been approved on a bipartisan vote.
Officials with the tobacco companies, and allies who include some public health advocates, counter that they’ve been trying to crack down on ultra cheap and unregulated cigarettes, which they contend skirt tax and health laws.
Sen. Max Baucus (D-Mont.), who sponsored the Secure Rural Schools amendment, said that the $346 million program supports schools and road projects in Montana and elsewhere. He said the $97 million tobacco provision helps provide “critical funding” for the program by closing a loophole that some smokers have been using to avoid taxes.
Enjoying a tax loophole
“Roll-your-own cigarette machines take advantage of an unintended tax loophole, and that isn’t right, so this offset closes it,” he said in a statement.
But Accordino says the case illustrates how corporate America can quietly use its political influence in Washington to secure wins on the business battlefield.
He acknowledges that his corner of Little Tobacco, which has come under scrutiny from several state attorneys general, might not make for the most sympathetic poster child to talk about the ills of Washington. But he contends it was unfair that he lost his fight on the highway bill before he even knew it had begun.
“I don’t expect sympathy, but this is just big business influencing legislation through their dollars. . . . They want us gone, and they’re capable of paying to get us gone,” he said.
Despite the decline in the popularity of smoking, tobacco companies remain prolific campaign donors and aggressive lobbyists on Capitol Hill. The Altria Group, which used to be Philip Morris, spent $11 million on lobbying last year.
Individuals and political action committees associated with the company have since 2007 given $30,000 to Baucus and his PAC, according to the Center for Responsive Politics.
A spokesman for Altria, the nation’s largest cigarette maker, and the president of Liggett Vector Brands, the fourth-largest company, confirmed that they have been lobbying for congressional action on the roll-it-yourself machines, and say they have a compelling case to make.