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By Mehgan Belanger
It was like deja vu -- on Feb. 4, 2009, Congress passed a bill to increase the federal excise tax on cigarettes by a hefty 61 cents per pack, and increase other tobacco products' taxes by similar lofty amounts. The goal: fund an expansion of the State Children's Health Insurance Program (SCHIP), to cover an additional 4 million uninsured kids.
Except this time, with President Barack Obama, an occasional smoker himself, getting comfortable in the Oval Office, the undeniable nightmare for c-store retailers turned into a stark reality when he signed the bill just hours later.
In early October 2007, and again in mid-December that year, President George W. Bush vetoed measures that would have increased tobacco taxes to fund an expansion of SCHIP, stating the measures were flawed and would raise taxes, as well as allow adults and higher-income families access to the program.
Under an Obama administration, however, the third time was the charm. With his signing, he said, "Today we fulfill one of the highest responsibilities that we have: to ensure the health and well-being of our nation's children. It's a responsibility that's only grown more urgent as our economic crisis deepens, as health care costs have exploded and millions of families are unable to afford health insurance."
There's a reason why Congress was determined to pass a bill that would put the business of all tobacco retailers in jeopardy -- especially those c-stores that rely heavily on the traffic and profits cigarettes generate -- it's the kids. The bill was marketed as pro-children. When debating the issue, advocates of the bill vilified opponents by alleging they were fighting against the innocent, uninsured children of this nation. And, of course, it's detrimental to a congressman's image to vote against the children, no matter his logical and legitimate reasoning.
One SCHIP supporter at the now-defunct, non-profit Rockridge Institute even brought God into the equation, and asked opponents to imagine explaining their stance to a classroom of "fragile" sick children, stating "Would you tell them that if God has not provided them the resources to treat their illnesses that you, a mere mortal, should not provide what God has refused to give?"
C-stores and other tobacco retailers don't have much of a chance with lawmakers when judged alongside an ill grade school student. In some lawmakers' eyes, convenience stores sell those deadly cigarettes, the obesity-causing soft drinks and trans-fat-filled hot dogs, and not to mention they also reap serious chunks of change by gas-price gouging each time the threat of a hurricane makes the headlines. These misguided lawmakers probably think higher tobacco taxes don't matter much to this industry.
The realities of this new law are warped. But it's a reality c-stores will have to face and adapt to as of April 1, just like the many other legislative hurdles the industry faces each year. Take SCHIP as a lesson, and next time a bill arises putting c-stores in jeopardy, remember the industry is a stakeholder in the issue just as much as anything, or anyone, else.
Effective April 1, the former and new tax rates under the SCHIP law on tobacco products are:
-- Cigarettes: from 39 cents to $1.01 per pack
-- Cigarette papers: from 1.22 cents to 3.15 cents per 50 papers
-- Cigarette tubes: from 2.44 cents to 6.30 cents per 50 tubes
-- Smokeless tobacco: from 58.5 cents to $1.51 per pound
-- Chewing tobacco: from 19.5 cents to 50.3 cents per pound
-- Pipe tobacco: from $1.09 to $2.83 per pound
-- Roll-your-own tobacco: from $1.09 to $24.62 per pound
-- Small cigars: from $1.82 per thousand to $50.33 per thousand
-- Large cigars: from 20.71 percent to 52.75 percent of the price, but not to exceed 40.26 cents per cigar