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The House Ways and Means Committee introduced the newest incarnation of the State Children’s Health Insurance Program (SCHIP) today. The International Premium Cigar & Pipe Retailers Association (IPCPR) reported in an email that the legislation would impose a revised federal excise tax on large cigars—52.4 percent, with a maximum tax cap of 40 cents per cigar. It was feared throughout the cigar industry that the cap would be much higher. The original version called for a $10 cap, and earlier versions had a cap of $3 per cigar. The tax is currently capped at five cents. The bill, which seeks to fund an expansion of SCHIP with higher tobacco taxes, is expected to pass given the new Democratic leadership in Washington. Last year, Congress attempted to pass the expansion, but President Bush vetoed the legislation two times, most recently in December. "Our industry came together to aggressively challenge the disastrous, proposed $3 tax cap,” wrote Chris McCalla, legislative director of the IPCPR, in the email. The new legislation also does not have a floor tax on cigars, although certain other tobacco products would be subject to the floor tax. All things being considered, the outcome could’ve been a lot worse. For that, I’m pleased that the cigar community no longer has to worry about the ridiculous $3-$10 tax per cigar initially suggested … for now. Who knows: They may try to introduce an amendment to the Bill next year if it looks like they need additional funding But, I wonder how much more the end-consumer will ultimately end up paying. It would not surprise me to see everyone inside the distribution pipeline attempt to justify a price increase from the manufacturer all the way to the retailer. Just remember what the gas stations did when the price of gas skyrocketed upwards beyond $4/gallon. They ended up charging customers more for paying with a credit card. Last I checked, gas was around $1.50/gallon but they’re still charging extra if you pay with a credit card. I, for one, intend to stock up on cigars before March rolls around. |
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I found your site on Google and read a few of your other entires. Nice Stuff. I’m looking forward to reading more from you.
According to Rep. Dave Camp, R-Michigan, “Increasing the cigarette tax … does not, will not, and cannot cover the costs of this program.”
According to Rep. Wally Herger, R-California, “Funding the bill through cigarette taxes is irrational, because it finances a growing program through a declining revenue source.”