Tobbacco Tax increase

[Mr.Lordi]

Tobacco taxes may go to child health

By KEVIN FREKING, Associated Press Writer Sat Jul 7, 7:36 PM ET

WASHINGTON - The nation's 45 million smokers will probably help pay for the spending increase that Democrats want for children's health insurance, say analysts familiar with deliberations on Capitol Hill.

Democratic lawmakers will push for $50 billion in new funding for the State Children's Health Insurance Program over the next five years. To pay for that increase, they must find new sources of revenue or cut existing programs.
Powerful trade groups representing doctors, hospitals and insurers have united around the idea of taxing tobacco. Democratic leaders have not said to what extent they will agree.
Still, the question now is not whether the tobacco tax will go up — but how much it will go up, said Ron Pollack, executive director of Families USA, an advocacy group that promotes universal health insurance.
"I've every reason to believe an increase in the tobacco tax will be part of the way expanded health insurance for children is paid for," Pollack said.
Pollack said his assessment was based on "frequent and relatively recent conversations" with the committees that have jurisdiction over SCHIP. Democrats from the House and the Senate are expected to unveil their respective SCHIP proposals soon.
The federal tax on tobacco stands at 39 cents per pack, and it generated about $7.2 billion in 2005. The money goes into the general fund of the U.S. Treasury.
States also tax cigarettes. The rates range from $2.58 cents a pack in New Jersey to 7 cents a pack in South Carolina.
Tobacco companies oppose another tax increase on their product, but it's unclear whether the industry has enough clout to fend this one off. The ban on unlimited contributions to the political parties, called soft money, has resulted in a significant drop-off in campaign contributions from the industry.
The Center for Responsive Politics reports that total campaign contributions from the tobacco industry fell from $9.2 million in the 2002 election cycle to $3.5 million in last year's cycle. The center also ranks industries when it comes to campaign contributions; since 1996, tobacco has fallen from 26th in the center's rankings to 62nd.
Most of the industry's contributions in recent elections — about three quarters — have gone to Republicans.
Bill Phelps, spokesman for Philip Morris USA, the nation's largest tobacco company, said tax increases have already led to an 80 percent increase in the cost of a pack of cigarettes since 1999. The average cost of a pack now stands at $4.13, though those costs vary dramatically from state to state.
"We feel this trend is unfair to adult smokers as well as to tobacco retailers," Phelps said.
He said an excise tax increase may have unintended consequences because sales of cigarettes have been declining at about 2 percent a year while the cost of medical services provided through SCHIP have grown at least 4 percent annually.
"Relying on the cigarette excise tax to fund an important government program such as SCHIP will create long-term funding shortfalls," Phelps said.
But a tax increase on cigarettes would also have its benefits, said supporters of a tobacco tax increase.
For example, the American Medical Association, the trade group for doctors, said that for each 10 percent increase in the price of cigarettes, youth smoking is reduced by 7 percent, and overall consumption by 4 percent.

"The higher the tax, the more substantial the future public health benefit," said Dr. Ronald M. Davis, president of the American Medical Association. "Fewer smokers means fewer people with strokes, heart attacks, cancer, and other smoking-related health conditions."
The Centers for Disease Control and Prevention says that about 440,000 people in the U.S. die prematurely each year as a result of illnesses attributable to smoking.
Pollack acknowledged that support for the tobacco tax increase from health providers is not entirely selfless. With more revenue coming into the treasury, there's less pressure to make cuts to their funding.
For example, doctors face a 10 percent cut in their reimbursement when they treat seniors and the disabled through Medicare next year. Hospitals claim that changes set to kick in later this year would trim overall Medicare payments by $25 billion over five years.
Also, insurers face potential cuts in their government pay. An advisory commission to Congress has recommended that the government's payments to insurers should equal those provided through traditional Medicare — where doctors and other providers are paid a set fee for providing a particular service.
The Congressional Budget Office has estimated that eliminating the difference in the payment rates would save about $54 billion over the next five years. "We have supported the tobacco tax purely because the funds raised will be used for SCHIP," said Mohit Ghose, a spokesman for American's Health Insurance Plans. "We have also pointed out repeatedly that we do not believe there should be money taken from one government program for the Medicare population in order to provide funding for SCHIP. We believe that it is an unfair trade-off and we've worked diligently to find other funding sources."

Any thoughts on this?

Right now it is only ciggs I think, but I am sure pipe tobacco and cigars are not to far behind.

[thunderbucks]

Many taxes are unnecessary, especially those which pay for useless multi-billion dollar government programs. Like this, medicare, and social security...honestly.

[OtterAKL4987]

Its hard to say that healthcare for kids is a bad thing, but there is no doubt the Dems will manage to make the process as complicated as possible. Just my

[schweiger_schmoke]

...

Hard to say, because I'm sure any of us would agree that any child (with whatever situation) should be entitled to good health and the means to maintain it.

What the debate at hand should be is; "What alternative to syntax (tobacco/alcohol tax) could work for this?"

Similar to what thunderbucks believes, it may be a fine idea to do away with some forms of tax and instill taxes such as this.

Anyway, I'll keep with my stogs.

[hova45]

It is very hard to even have another tax increase a lot of us pay ridiculous amounts of tax as it is already why should we have to keep having this weight put on us who enjoy tobacco products. Why don't they find something else to tax like the rich multimillionaires or billionaires who use those dam shelters to get away or sleazy corporations who do the same. I woul like to keep some of my money in my pocket.

[c2000]

Its always about the kids...Except when I was a kid nobody gave a shit.


Hey why not raise tobacco taxes 100% then these social tinkering assholes can have insurance for everyone,,then after that is done they can go on the the next feel good cause.

Jerry in Minnesota.

[papajohn67]

Originally Posted by c2000

Its always about the kids...Except when I was a kid nobody gave a shit.


Hey why not raise tobacco taxes 100% then these social tinkering assholes can have insurance for everyone,,then after that is done they can go on the the next feel good cause.

Jerry in Minnesota.

You know the old saying, "Don't tax you, don't tax me, tax the guy behind the tree."

You want to help the kids, great idea but spread the cost out to everybody.
Otherwise why not fund EVERYTHING on the back of smokers.

I can see 5 years down the road on Cbid....5 pack Padron 1964 Torps...current bid $6000.00 "all taxes included"

[Teninx]

It's a simple 'guns or butter' economic model. Increase taxes, even on one particular market segment, and remove capital from the marketplace. Remove capital from the marketplace and weather a downturn in the economy.

Tax a product to the point where it becomes unaffordable and lose tax revenue that was once collected. We're becoming more and more Marxist every year. Just look at the thread that mentions the Supreme Court decision that could abolish the prohibition against price fixing.

[Moosie]

Democrats never saw a tax they didn't like. All dem candidates say they are going to raise your taxes.

[tuneman07]

IMO the biggest issue here is distinguishing between cigarettes and cigars. I personally do not smoke cigarettes and I think they are terrible things which cause an insane amount of health problems with very little redeeming value if any. I know it is easy for me to say this because I don't smoke but even my friends who do smoke don't even seem to like cigarettes. I love cigars however and I believe they are such different products that there simply must be a distinction made between them.