I recently learned that Congress is again considering increasing the federal excise tax on cigarettes by as much as 156%.
At a time when Congress is talking about passing a multi-billion dollar stimulus package, it doesn‘t make sense to raise any type of taxes. Moreover, I understand that as cigarette sales continue to decline it becomes an increasingly unreliable source of revenue for the government and that a cigarette excise tax impacts lower income households more than higher income households. That’s not fair!
I urge you to vote against any legislation to raise the federal excise tax on tobacco products.
This is an issue of great importance to me and I will remember how you vote on it.
YOUR NAME and ADDRESS
Just say NO! to taxes on smokers to fund children’s health care.
Here is Senator Kay Bailey Hutchison’s (form) reply:
Dear Mr. Siems:
Thank you for contacting me regarding tobacco taxes. I welcome your thoughts and comments on this issue.
The federal tax rate on cigarettes remained unchanged at eight cents per pack from 1951 to 1982. Since 1982, the rate has been increased several times, and the current federal tax on cigarettes is 39 cents per pack.
S. Con. Res. 21, the fiscal year 2008 Senate Budget Resolution, authorized an increase in the federal cigarette tax from 39 cents to $1, a 61 cent increase, to raise money for the State Children’s Health Insurance Program (SCHIP). The increased tax would have raised an estimated $7.6 billion per year for this important program. However, I voted against the Senate Budget Resolution, and the Conference Report, because it increased spending to nearly $15 trillion over five years and included a historic $732 billion tax increase. The Budget Resolution failed to extend vital tax cuts that are driving our growing economy and instead creates the steepest tax hike in history.
An increase in the tobacco tax was considered as part of H.R. 976, the Children’s Health Insurance Program Reauthorization Act of 2007. SCHIP provides health insurance benefits to children in low income families that cannot afford health insurance, but are ineligible for Medicaid. While I am a strong supporter of the SCHIP program, I also supported three different amendments which would have provided relief from the proposed taxes on tobacco products. Senate Amendment 2554, introduced by Senator Elizabeth Dole (R-NC), sought to amend the Congressional Budget Act of 1974 to provide for a 60-vote point of order against legislation that includes a Federal excise tax rate increase which disproportionately affects taxpayers with earned income of less than 200 percent of the Federal poverty level (such as any tobacco tax). The amendment failed by a vote of 32-64. Senate Amendment 2558, introduced by Senator Lindsey Graham (R-SC), sought to sunset the increase in the tax on tobacco products on September 30, 2012. A budget point of order was raised against the amendment, and a motion to waive the point of order failed by a vote of 39-60. Senate Amendment 2619 was introduced by Senator Bill Nelson (D-FL) to reduce the cap on the tax on large cigars from $10.00 to $3.00. This amendment passed with my support. The Children’s Health Insurance Program Reauthorization Act of 2007 passed the Senate on August 2, 2007 by a 68-31 vote. Additionally, when the Senate considered the Conference Report for this legislation, I joined 66 of my colleagues in support of this important program. On October 3, 2007, President Bush vetoed the Children’s Health Insurance Program Reauthorization Act of 2007. It is now my hope that the President will sit down with Congress so that together we can continue the SCHIP program within the scope of its original mission.
Other legislation proposing tax increases on tobacco products include S. 1799, which was introduced by Senator Blanche Lincoln (D-AR) on July 17, 2007. The bill seeks to apply rate parity to the excise tax on small cigars and small cigarettes by raising the tax from $1.828 cents per thousand to $19.50 per thousand units. Currently, there is a maximum federal tax of 4 cents per small cigar and 5 cents per large cigar (or 20.719% of the sales price, not to exceed $48.75 per 1,000 units). This legislation has been referred to the Senate Finance Committee, on which I do not serve. Should this legislation come before the full Senate, you may be certain I will keep your views in mind.
I appreciate hearing from you and hope you will not hesitate to keep in touch on any issue of concern to you.
Kay Bailey Hutchison
United States Senator
284 Russell Senate Office Building
Washington, DC 20510
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