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Legislators, tobacco-shop owners debate tax

Some tobacco shops are closing their doors after state revenue agents told them to pay manufacturers' taxes for their roll-your-own cigarette machines.

Kent Krueger opened the Ciggy Shack in Menomonee Falls in May with two roll-your-own machines. But after the state told him last month that he must pay both manufacturers' and distributors' taxes, Krueger shut down.

He told the Journal Sentinel he opened his shop after he couldn't find a job elsewhere. And after he closed, he said the state was going against Governor Scott Walker's famous mantra that Wisconsin is "open for business." But Revenue spokeswoman Stephanie Marquis said 8,000 other cigarette retailers around the state manage to stay in business and create jobs; her agency is just making sure everybody follows the rules.

Governor Walker disputed the idea Oct. 5 that a tax crackdown on roll-your-own tobacco shops means that Wisconsin is no longer "open for business." At his news conference, Walker defended the law that requires roll-your-own tobacco shops to pay both manufacturing and distributors' taxes.

The governor says being open-for-business means what he called "certainty" - and part of the certainty is to apply state laws to everyone across-the-board. Walker says he's not picking "winners and losers."

One of Walker's fellow Republicans in the Legislature takes issue with that. Germantown Representative Dan Knodl said the revenue department went "overboard" with its crackdown. He said the roll-your-own cigarette makers fulfilled a public demand - and they're now getting punished for it.

Last month, officials sent letters to places with roll-your-own machines, reminding them of the requirement to pay manufacturers' taxes. Now, they're ordering machines to be shut down at places that don't pay up.

There are up to 100 roll-your-own machines around the state, and some places have more than one.

The company that supplied Krueger's machines says it's thinking about taking the state to court. Phil Accordino of RYO Machine Rental says the roll-your-own makers should not be confused with the big cigarette manufacturers that pump out 20,000 smokes per minute.