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LOUISVILLE, Ky. -- If the proposal to expand the State Children's Health Insurance Plan (SCHIP) is signed into law, its provisions -- including a hike of the federal excise tax on tobacco products -- could have dramatic impacts on the tobacco industry, according to National Tobacco Co. Vice President Ron Tully.
The legislation passed the House and a key Senate committee last week. The full Senate is expected to soon vote on the measure, and President Barack Obama has voiced support of the bill.
As part of the expansion, the bill calls for an increase in federal taxes on several tobacco products, including a 61-cent increase per pack of cigarettes. In addition, the roll-your-own tobacco segment will see its federal excise tax rate increase 2400 percent, from approximately $1 per pound to more than $24 per pound of tobacco, Tully said in a statement.
Due to this proposed increase, an estimated 10,000 jobs will be lost at the small, independent roll-your-own tobacco companies, including their suppliers, vendors, distributors, wholesalers, shippers, processors and retailers, according to Tully.
Tully also said the proposed increase will deny roll-your-own tobacco consumers access and availability to products, and asked that the tobacco segment's tax rate increase be calculated in proportion to the proposed cigarette excise tax increase, be adjusted to a more reasonable level, or be phased in over a seven year period, as was proposed for the little cigar category in a House version of the bill.
CSNews' Associate News Editor Mehgan Belanger discusses why tobacco will always lose in the SCHIP fight on CSNews' Spare Change blog. click here to see her thoughts, and share your own.