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The president will release his proposed budget on Wednesday. However, rumors of a levy hike began swirling over the weekend. The tax increase would help fund pre-kindergarten programs for 4-year-olds, according to Bloomberg Businessweek. Obama outlined the program in his annual State of the Union speech to Congress.
On Friday, White House spokesman Jay Carney declined to elaborate on the proposed tobacco tax increase.
The tobacco industry is not waiting until the unveiling of the proposed budget to comment.
"The idea of increasing taxes on low- to middle-income Americans at this time is ludicrous," Bryan Hatchell, a spokesman for Winston-Salem, N.C.-based Reynolds American Inc., told the news outlet. "As middle-income Americans struggle to make ends meet in a very slow economic recovery period, this is not the time to hit them with higher taxes."
Richmond, Va.-based The Altria Group Inc. also spoke out against the possibility. "It is unfair to single out adult tobacco consumers with another federal tobacco tax increase to pay for a broad, new government spending program," said David Sutton, a company spokesman.
NACS, the Association for Convenience & Fuel Retailing, also raised concern to any increase to the federal tax.
"It is not just the loss of sales, but also the loss of customers," said Jeff Lenard, vice president, industry advocacy for the Alexandria, Va.-based trade association. He added that tobacco sales account for 40 percent of non-gasoline sales in the convenience channel.
The federal government currently taxes cigarettes at about $1 a pack. The levy was increased by 61 cents in 2009.