Jul 17, 2007

Government Loves Cigarettes

Or how to raise taxes $15.25 billion a year 61¢ at a time.

Politicians love to demonstrate their concern over the welfare of the American people by piling on the anti-tobacco bandwagon. At the same time fall all over themselves to figure out how they can tax, sue and squeeze more money from tobacco.

Currently the Senate Finance committee is passing an increase of the cigarette tax from 39¢ to $1.00 or a 156% increase. Of course this added revenue will be used to finance a health plan program for children. What happens when everyone stops smoking? I guess they will just raise taxes.

While the Democratically controlled Congress shouts about taxing the rich and helping the poor, they continually find it easier to impose taxes that impact the lowest wage earners the most. If you smoke one pack a day that will equate to a $222 annual tax increase.

From a Reynolds American Inc.
Press Release (pdf):

Does The Right Hand of the Senate Know What The Left Hand is Doing?

WINSTON-SALEM, N.C. – July 17, 2007 -- This week, two Senate committees will likely approve separate, but diametrically opposed, pieces of legislation related to tobacco products.

On the one hand, the Senate Finance committee is expected today to increase the tax on tobacco products by 156 percent to fund expansion of the SCHIP program. The increased taxes, falling primarily on middle- and lower-income tobacco users, will generate an additional $35 billion in government revenue.

Federal and state taxes and payments already account for more than 50 percent of the average cost of a pack of cigarettes.

On the other hand, the Senate HELP committee is scheduled on Wednesday to consider and likely approve legislation granting virtually unlimited regulatory authority over tobacco products to the Food and Drug Administration.

A chief proponent of the FDA legislation, Dr. Greg Connelly of Harvard University School of Public Health, testified before the HELP committee in February that the bill “could turn Marlboro into lard: legal, but no one uses it.”

“These consecutive committee actions beg the question of whether the Senate is trying to have it both ways: sell more cigarettes so the federal government can have billions of dollars more in tax revenue, while at the same time regulating tobacco products to the point no one will use them,” said Tommy Payne, executive vice president of public affairs for Reynolds American Inc.


Anonymous said...

I agree with Greg Connelly at the Harvard School of Public Health, when he says that through FDA regulation, Marlboro may turn into lard, legal but nobody uses it. Despite partisan political banter, his opinion seems clearly in the direction I favor. As for Tommy Payne/Reynolds, an increase in taxes will NOT sell more cigarettes, as he suggests Congress is seeking, (any surprise where he comes from?) but WILL generate a revenue increase as well as an increase in smoking cessation. If the tax falls disproportionately on lower-middle income groups, they are likely to reap the greatest benefit through SCHIP funding...and that seems perfectly appropriate.

Fred Adelman said...

Dear A:

Your comment has led me to post a new article: Government, SCHIP And The Sin Tax Revisited.

Please take a look.