WASHINGTON -- Even as the Senate Finance Committee was voting on and ultimately approving a proposal that would increase the federal excise tax on all forms of tobacco, those against the measure--from Philip Morris USA to the National Association of Tobacco Outlets (NATO) to President Bush--were out in force yesterday, letting their opposition be known.
NATO members are urged to continue calling their U.S. senators and U.S. representatives to oppose the cigarette and tobacco tax increases, along with faxing NATO petitions signed by customers to Congress,' Thomas Briant, executive director [image-nocss] of NATO, wrote in an e-mail newsletter sent to members yesterday.
By a vote of 17-4, as reported in a CSP Daily News Flash yesterday, the Finance Committee approved a bipartisan plan to renew and improve the State Children's Health Insurance Program (S-CHIP). The program provides health coverage to low-income, uninsured American children whose parents do not qualify for Medicaid, but who cannot afford private health insurance.
The vote--originally scheduled for Tuesday--was delayed by the all-night session on the war in Iraq.
U.S. Senators Max Baucus (D-Mont.), Chuck Grassley (R-Iowa), Jay Rockefeller (D-W.Va.), and Orrin Hatch (R-Utah) crafted the $35 billion proposal to maintain coverage for all 6.6 million children covered by S-CHIP today, including 800,000 who will lose S-CHIP coverage without these additional funds, and to bring dependable health coverage to an additional 3.2 million low-income, uninsured American children in the next five years.
While few people in the industry disagree with the intent of the bill, there is concern about how it will be funded: by increasing the federal cigarette tax from 39 cents a pack to $1 a pack and raising the federal excise tax on other tobacco products, including cigars, pipe tobacco and smokeless tobacco, by 156%.We view the proposal as overtaxation and are urging our members through special alerts to call their U.S. Senators and Representatives in Washington, D.C., Briant said in June. In addition, we are providing our members with petitions for their employees and customers to sign opposing the tax increases.Similarly, PM USA representatives have discussed the issue with many of their cigarette retailers and provided tearoff counter cards that direct consumers to their website for more information.
Philip Morris opposes an increase in the excise tax for numerous reasons, PM USA senior director of corporate communications Brendan McCormick told CSP Daily News.
Among those reasons:
Economic Impact. Since 2000, federal and state governments have increased their cigarette excise tax rates 79 times. In fiscal year 2006, federal and state governments received $21.5 billion in cigarette excise tax revenues, compared to $13.1 billion in 1999. This trend is unfair to adult smokers and tobacco retailers,' PM USA noted. Fiscal Impact. Cigarette excise taxes do not raise money from the taxing jurisdiction. However, due to the product's declining sales base and the rise of illegal purchasing alternatives, cigarette taxes are not a long-term solution to fiscal problems and may have a negative impact on income and payroll tax revenues.While the S-CHIP bill will now go before the full Senate for consideration, President Bush reiterated yesterday that he will veto the bill if it makes it to his desk, not because of the tobacco tax issues, but because of problems he has with the program itself.
It was a program initially designed to help poor families afford health care for their children,' Bush said in a speech during a roundtable meeting on health care in Landover, Md. I support that concept. [However], I believe government cannot provide affordable health care. I believe it would causethe quality of care to diminish. I believe there would be lines and rationing over time. If Congress continues to insist upon expanding health care through the S-CHIP program'which, by the way, would entail a huge tax increase for the American people I'll veto the bill.
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