Excise Taxes

Obama signs children’s healthcare bill
The House gave final approval to a bill extending health insurance to millions of low-income children, and President Obama signed it on the afternoon of February, 4th in the first of what he hopes will be many steps to guarantee coverage for all Americans.  The Obama White House, battered by a debacle over Tom Daschle’s nomination to be secretary of health and human services, exulted in the passage of the bill, saying it showed how much difference an election could make. Mr. Bush vetoed two similar bills, and the House failed to overturn those vetoes. Democrats were so sure of victory on Wednesday that the White House scheduled a signing ceremony before the House even passed the bill. Click here to read more.

Little cigar consumption on the rise, while cigarette use declines: SCHIP law will tax cigars at cigarette equivalent for first time
Troubling new data from the Maxwell Report has shown that over 1997-2007 cigarette consumption has declined by 25% but little cigar consumption has increased by 240% and cigarillo consumption has increased by almost 150%. While efforts to decrease cigarette use have prevailed, it seems some have turned to other forms of tobacco use. Little cigars and cigarillos are particularly popular among young adults and African Americans. This is partly attributed to low prices, candy flavors and promotional marketing of these products that imply affluence and target hip hop culture. The State Children’s Health Insurance Plan (SCHIP) recently signed into law by President Obama includes federal tax increases on cigarettes and cigar products. Click here to read the news release from the American Legacy Foundation.

Arkansas cigarette tax increase delivers victory for kids and taxpayers (AR)
As of March 1, the cigarette tax in Arkansas will increase 56 cents to $1.15 per pack. Governor Mike Beebe led the move to pass the bill, which will not only encourage 9,300 Arkansas smokers to quit, but will also prevent 7,300 smoking-related deaths in the state. The tax will raise revenue for various state healthcare initiatives. Gov. Beebe signed the bill into law on February 17. Click here to read a statement from the Campaign for Tobacco-Free Kids, which encourages states to follow Arkansas’ lead by increasing their cigarette taxes, a proven approach to encourage smokers to quit and prevent children from smoking.

Beshear signs alcohol and tobacco law (KY)
The Governor of Kentucky, Steve Beshear, signed his approval of a measure that will double the state’s cigarette tax to from 30 cents to 60 cents per pack as of April 1. The measure will also impose a six percent retail sales tax on all alcohol products. The cigarette and alcohol taxes will generate $81.5 million and $97.9 million in state revenue, respectively. The Campaign for Tobacco-Free Kids (CTFK) issued a statement criticizing Kentucky legislators for choosing the 30-cent cigarette tax hike over a proposal for a 70-cent increase. CTFK estimates that if the cigarette tax had increased to $1 per pack (over the current plan for a sixty-cent tax), an additional 11,200 smoking-related deaths could be prevented in Kentucky. This would save $532 million in healthcare costs, and would raise an additional $115 million in state revenue annually. Click here for information on the planned tax increase, or click here to read the CTFK press release.

Granholm wants tax to snuff tobacco habit, help budget (MI)
Michigan Governor Jennifer Granholm wants to increase taxes on loose tobacco in her state even after the biggest federal tax increase hits roll-your-own tobacco, rising from $1.10 per pound to $24.78 per pound. Granholm argues that the tax increase will help to balance the state’s budget and while discouraging discourage tobacco use. To read more, click here

Miss. Senate committee oks cigarette tax increase (MS)
The Senate Finance Committee has voted to increase Mississippi’s cigarettes excise tax from 18 cents a pack to 49 cents a pack and there is confidence that the bill will pass in the full Senate. The state’s current cigarette tax is the third lowest in the nation. The tax increase would help Mississippi increase its lagging revenue although the House and Senate are not in agreement about where the revenue should be spent. The Senate is proposing using the revenue to help cut down increases to car tag prices while the House wants to use the funds to supplement elementary and secondary school budget cuts. Proponents of increasing the cigarette tax are advocating for a greater increase than the proposed 49 cents. Click here to read more. Click here to read a statement from the Campaign for Tobacco-Free Kids urging for Mississippi legislators to increase the tax to one dollar.

Utah Senate panel snuffs out tobacco-tax hike (UT)
Utah Senate committee debated whether or not to increase the cigarette taxes in the state at a time when the economy is already suffering.  Opponents of the tax increase cited fears of forcing smokers out of state to buy cigarettes and concerns about damaging the economy further.  Sen. Allen Christensen, R-North Ogden, initially had proposed raising the 69.5-cent-a-pack cigarette tax to $2, but ran into resistance and lowered the boost to $1.30, the national average for nontobacco-producing states. To read more, click here.

House panel rejects bill to hike tax on cigarettes (VA)
The Virginia House of Delegates subcommittee defeated Gov. Kaine’s proposal to increase the cigarette tax in the state. Gov. Kaine wanted to use the revenue from the proposed tax to help fund Medicaid because the state is currently facing a $2.9 billion shortfall in funding for the program. Democrats defended the bills defeat claiming an opposition to raising taxes on a single industry during tight economic times. The tobacco industry provides the state of Virginia with millions in revenue and thousands of jobs. Tobacco giant, Philip Morris’ headquarters and one of their research centers are housed in Richmond, VA. The proposal was estimated to generate the state $148 million in the first year of enactment. Click here to read more. Senate committee rejects Kaine’s cigarette-tax proposal The Senate committee has also rejected Gov. Kaine’s cigarette tax increase proposal. Without the revenue the proposed tax would have created, House and Senate budget members will have to find a new source to support the state’s underfunded Medicaid program. Click here to read more.

Cigarette tax hike dies quickly (WY)
Wyoming Representative, Lori Millin, D-Cheyenne, proposed to raise the tax on a pack of cigarettes from the current 60 cents to $1.10. but the bill died in the House.  Millin argued that the 50 cent increase would prevent youth initiation and by making cigarettes less affordable.  Lobbyist for Phillip Morris argued that the price hike was unfair for adults who smoke and convenience stores who depend on one third of the profits from cigarette sales.  To read more, click here.

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