2,400 pct Federal Tax Hike on roll-your-own tobacco APRIL 1, 2009

Obama overturned a Bush veto only 16 days in to his term.
The pack price increase is only 40 cents, where as the roll
your own increase is going from a buck a pound to 25 dollars.

The pigs don't bother lying, and tell us it is for bringing in more revenue.
Who has the most to gain besides the feds? I think its the major tobacco
companies who have lost their dominance to smaller tobacco companies.

Tax hike has smokers fuming

By TERESA MCMINN

For the Daily Record/Sunday News

Updated: 03/16/2009 11:14:28 PM EDT

Brooke Duppstadt, 18, an employee with Custom Blends, demonstrates how to make a cigarette. (Daily Record/Sunday News - Jason Plotkin)

A 2,400 percent federal tax hike on roll-your-own tobacco has many smokers fuming.

But workers at a local tobacco store say their customers are trying to beat the clock, not the habit.

On Thursday, workers at Custom Blends in York Township talked of customers -- that shop in the store as well as order supplies from the store online -- that are buying as much tobacco as possible before the tax kicks in April 1.

Customers who normally buy one or two pounds of tobacco at a time are now buying 20 to 30 pounds, said Diane Tucci, a worker in the store.

She said she's also received several calls from people that are angry about the tax increase.

"People are yelling at the top of their lungs," she said.

Smokers, including many that say it's healthier to smoke roll-your-own than commercial pre-made and Fire-Safe cigarettes, said the tax is unfair, said Heather Wantland, manager of Custom Blends.

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Comment by truth on March 30, 2009 at 7:34pm

SCHIP Expansion Bill Will Devastate Roll Your Own!

Feb 4, 2009 - Obama Signs SCHIP bill

Although cigarette sales in the U.S. have decreased 18% since 2000, there has been an increase in sales and use of Other Tobacco Products (OTP); moist snuff, Roll Your Own (RYO) and small cigars. Federal Excise Tax (FET) on tobacco products netted the Treasury over $7 Billion in
2007¹

yet there is a growing fear in Washington that smokers will continue to seek alternatives to heavily
taxed cigarettes.

In a misguided attempt to raise the additional $33 Billion to fund the SCHIP Expansion for the next 4-1/2 years, cigarette taxes are set to increase $0.62 per pack. Since this 158% FET Increase is likely to drive even more smokers
to seek lower cost alternatives, the U.S. Congress has decided to 'level the playing field' by increasing
the FET on Roll Your Own tobacco and small cigars OVER 2,000%.

Logic seems to be in short supply for the lawmakers who are seeking additional funds by adding another tax on a low income group who are already struggling to pay the average combined state & federal taxes of Over $2.50 per cigarette pack.

The vast majority of those who have switched to RYO, small cigars and other lower taxed tobacco products have done so simply because They Can't Afford Cigarettes that cost over $5 per pack!

Many consumers who choose Roll Your Own due to it's lower costs won't be able to afford RYO once the additional $24 per pound Tax takes effect on April 1st!

Tobacco Taxes Before & After SCHIP

SCHIP History

The State Children's Health Insurance Program (SCHIP) is a federal-state program that offers health care benefits to children in families that cannot afford private insurance, yet earn too much to qualify for Medicaid. SCHIP was established in 1997 and funded primarily by Federal Excise taxes on cigarettes
($0.34 per pack), cigars (18% of wholesale price), pipe and rolling tobacco ($0.96 per pound) and other
tobacco product taxes. SCHIP's original purpose is commendable, compassionate and one could argue - necessary.

Federal Excise Tax rates on all tobacco products were raised approximately 14% in mid-2002 to cover the amendments to SCHIP passed in 2001. In 2007 an expanded SCHIP bill which included tax increases for cigarettes to $1 per pack and rolling tobacco to $8.89 per pound was passed by Congress, only to be vetoed
twice by President George W. Bush. An attempt by Congress to override the veto in 2008 fell just 15 votes
short and Federal funding of the current SCHIP program was extended to March 31 2009.

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2009 SCHIP legislation; H.R. 2

When the expanded SCHIP bill - H.R. 2 - was passed by the U.S. House of Representatives on Jan 14, 2009 Excise Taxes were set to raise approximately 156% on cigarettes, cigars, pipe tobacco and most other tobacco products to pay for the estimated $33 Billion spending increase.

However, in a last minute rewrite of page 273 of the 285 page document, the FET on Roll Your Own tobacco was changed from the $1.0969 to $8.89 per pound increase in the 2007 bill to a new rate of $24.62 per pound!

A floor tax provision was also added, meaning that all tobacco products except cigars in inventory at manufacturers, distributors, tobacconists, convenience stores, etc. will immediately be subject to the new tax rate on April 1, 2009 when the law takes effect.

To illustrate how desperate the House Democrats were to push the bill through without proper consideration, the 285 page bill was introduced on Tuesday the 13th and referred to the Ways and Means Committee (as usual). It was then rushed to the floor (by House Resolution) and after only one hour for comments, was passed
by a roll-call vote 289-139 on Wednesday afternoon.

Congressman Dave Camp (R-MI) in his floor statement made these points.²

"Let me first state the obvious problem with this bill: a children’s health program should not be used to cover adults, non-citizens, potentially illegal immigrants, and those making $80,000 per year.

There is another problem with the bill—one the majority hopes you ignore: this bill blatantly attempts to hide the true cost to American taxpayers. It is irresponsible and untenable to fund a children’s health program with a revenue stream that is fast drying up. Increasing the cigarette tax, regardless of your
support for such an idea, does not, will not and cannot cover the cost of this program...

The Democrats want you to ignore the fact that the percentage of Americans who smoke has been dropping for decades. But research and logic both show that raising the prices of cigarettes will lead to less smoking and fewer tax dollars coming into the federal treasury.

The only way for this funding scheme to work is if the Democrats find 22.4 million new smokers."

President Obama will surely sign this Bill into Law

Shortly after the House passed H.R. 2, President-elect Obama said in an E-mailed statement:

"I'm so pleased that Democrats and Republicans in the House of Representatives came together to provide health insurance to over ten million children whose families have been hurt most by this downturn. This coverage is critical, it is fully paid for, and I hope that the Senate acts with the same sense of
urgency so that it can be one of the first measures I sign into law when I am President."

Part of Obama's campaign of "Change We Need" was that under his administration 95% of working Americans would see their taxes cut and "No family making less than $250,000 will see their taxes increase". Apparently he can't wait to violate his pledge to the American people.

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SCHIP Expansion? Just Say No!

I do not oppose renewing the current SCHIP program, although ideally I'd like to see some tightening of it's eligibility requirements (adults can currently receive health care through SCHIP in 14 states and in 4 states there are more adults than children in the program). It is the ever expanding coverage and estimated $33 billion
tax hike over the next 4-1/2 years funded solely by increased taxes on tobacco products that I take issue with.

During this period of a deepening national recession, continued job losses in nearly every sector and a financial crisis rivaling the Great Depression, one must question the validity of expanding a supplemental Medicaid program originally intended solely for the uninsured children of the working poor. Adding eligibility
to families who already have private health insurance coverage and those with incomes of $84,000 or more
(a family of 4 with income up to 4 times the poverty level would qualify for SCHIP under the new guidelines)
is totally outside the original intent of the program.

You might see me as some crack-pot with an agenda (after all, the goal of this web site is to promote Roll Your Own, not see it destroyed by the single largest Tax Increase in U.S. History), so don't take my word for it, read George Will's scathing criticism of the current SCHIP bill in his op-ed piece
Fiscal responsibility? Obama already is breaking the bank

All tobacco taxes are regressive ³ (the tax falls disproportionately on low-income individuals) and these proposed triple-digit and higher tobacco tax increases to fund a Federal entitlement program on the backs of a low-income minority is shameful,
and once again I'm not the only one saying so. I urge
you to read the following Tax Foundation report Funding S-CHIP with Federal Cigarette Tax Increase is Poor Tax Policy

Another worthwhile read is the Heritage Foundation article which exposes the serious flaws buried in last year's SCHIP bill and outlines the Top 10 Changes for Congress to Consider

We held out slim hope that if these outrageous tax increases on the working poor were brought to light and debated on the floor of the Senate they might consider altering the increase of Roll Your Own tobacco taxes to the same 156% rate currently proposed for pipe tobacco ($2.8311 per pound), cigarettes, large cigars
and smokeless tobacco products.

Sadly that did not occur, the Senate version actually increased every tobacco tax slightly above the House version to add funds for dental coverage.

Jan 29, 2009 Senate passes SCHIP 66 to 32 at 9:15pm

The Senate revisions included provisions for dental care funded by even higher tobacco taxes (RYO Tax at $24.78 vs $24.62 in the House version).

Back in the House on Feb 4, the revised SCHIP expansion bill received a cursory 1 hour 'debate' and passed by a vote of 290 to 135, it was then sent to President Obama for his signature that same afternoon.

Feb 4, 2009 President Obama signs SCHIP legislation

This new Public Law No: 111-3 will raise RYO tobacco taxes nearly 2200% from $1.10/lb to $24.78/lb while raising cigarette taxes 158% ($0.62/pack) and most other tobacco products at the same 158%.

Tobacco Taxes Before & After SCHIP

Very few Americans realize the devastation that will likely occur to the small players in the tobacco industry, distribution and retail chain. Many jobs will be lost and businesses, especially those catering to RYO consumers, will likely be forced into bankruptcy in wake of the 2,200% Excise Tax increase and
concurrent implementation of a floor tax on April 1, 2009.

Many Americans have no sympathy for smokers, it's easy to feel superior to and vilify those who appear to be slaves to their vices, but even the most cold hearted anti-smoker out there would probably admit in private that a 2,200% tax increase is going too far! I'm sure that if a Tax Increase of this
magnitude were to be applied to Beer and Wine rather than small cigars and Roll Your Own tobacco, there
would be a public outcry and rebellion far beyond anything seen in modern American history.

Tobacco Taxes Before & After SCHIP

If you'd like to add your comments on this issue, join the discussion in the RYO Revolution Forum