Why the Tobacco Tax Needs Amendment

On February 4, 2009 President Obama, who failed to keep his campaign promise to quit smoking, secretly signed the Children's Health Insurance Program Reauthorization Act of 2009 (Public Law 111-3). Congress passed legislation last year raising the tax to fund the State Children's Health Insurance (S-CHIP) Program, but former president George W. Bush vetoed it. As the result of this tax, that went into effect on April 1, 2009 retail store prices for handrolling tobacco and small cigars doubled while pre-rolled cigarrettes remained roughly the same, at plus or minus five dollars a pack.

Analysis of the original bill in 2008 led to the conclusion that Congress needed to appropriate the Attorney General Tobacco Master Settlement because it makes exact change for the needs of CHIP and is not prevented from doing so, and even encouraged to do so, in its language. Although a small tax increase might be needed to finance every last penny of CHIP, it is subversive for the law to conceal the proceeds of the largest civil settlement in history. Total SCHIP program expenditures are $2.7 billion from States and $6 billion from the federal government for a total of $8.7 billion. The Tobacco Master Settlement is a total of $206 billion over 25 years, an average of $8 billion a year and would be much safer appropriated by legislation.

The new taxes imposed on tobacco products are not only hypocritical on the part of the President whose Taylor made cigarettes are subject to a 158% increase in their rate of federal taxation, to $1.01 per pack, the tax is extremely regressive in that it penalizes the handrolling tobacco and small cigars smoked by cost conscious consumers with increases of 2,159% and 2,653% respectively, while the tax on large cigars go unincreased. Although the Alcohol and Tobacco, Tax and Trade Bureau of the US Treasury provides careful directions for the increase in taxes they fail to calculate the rate of increase and either failed to detect are are trying to cover up gross inequalities in what must be the most regressive sales tax ever passed.

The rhetoric for the tobacco tax is mostly the product of the Campaign for Tobacco Free Kids who claim every 10 percent increase in the price of cigarettes reduces youth smoking by about seven percent and overall cigarette consumption by about four percent. This new tax however seems more likely to drive more smokers to abandon the child-proof method of hand rolled cigarettes and as a result may not be so successful at reducing teen smoking, as other fairer taxes have been. The driving force behind this bill is sure to be the corrupt interests participating in the Tobacco Master Settlement.

To protest the tobacco tax and the other reckless tax and spend policies of the 111th Congress, American Solutions has organized Tax Day Tea Parties across the county on April 15th. Although the 12 American Solutions for Jobs and Prosperity provided fail to raise a single just cause for revolution, peaceful or otherwise, the name of the event evokes memories of the Boston Tea Party of 1773 at the beginning of the American Revolution. The story goes that after Boston officials refused to return three shiploads of taxed tea to England a group of colonists boarded the ship and destroyed the tea by throwing it in the harbor. The people simply do not tolerate taxation without representation.

It is hoped that smokers will avail of the Tax Day Tea Party to throw away, burn or otherwise destroy tobacco products either by quitting or lighting up at the protest. The salient issues for protesting the tobacco tax in the CHIP Reauthorization are 1. it conceals liability of the Master's Tobacco Settlement for funding S-CHIP, 2. It is the most regressive tax ever witnessed whereas it increases taxation on the products favored by the poor over 2,000% and those on middle class tobacco products 158% and those on large cigars, not at all.

The tax is repugnant to the philosophy of no taxation without representation because children under the age of 18 are neither allowed to vote nor purchase tobacco products. Much like the 111th Congress that most self-respecting citizens have dissolved. Metaphorically the federal government has been caught in the Act of shoplifting and was discovered to be carrying a concealed weapon. For these reasons Congress must amend the law so that there is a tax increase of 158% on all tobacco products and that the Attorney General Tobacco Master Settlement be totally dedicated to S-CHIP.

To find a protest near you go to http://www.americansolutions.com/General/?Page=a6386a2f-6bb2-4ee5-b230-b46b54c887e4

Alcohol and Tobacco, Tax and Trade Bureau. Federal Excise Tax Increase and Related Provisions. http://www.ttb.gov/main_pages/schip-summary.shtml

Sanders, Tony J. National Health Insurance: Compromise to Immediately Achieve Single Payer Universal Coverage and Progressively Realize National Health Insurance, that is Free for All. Chapter 6: Children's Health Insurance. pp 48-51. www.title24uscode.org/nhi.doc

Wilson, Johnson Joy. Summary of the Attorney General Master Tobacco Settlement Agreement. AFI Health Director. National Conference of State Legislatures. March 1999. http://academic.udayton.edu/health/syllabi/tobacco/summary.htm