Cigarette, cigar costs likely going up to pay for poor kids’ insurance
January 26, 2009 at 9:32 am by Wayne GarciaI have nothing against the children of the working poor. And I actually wouldn’t mind if tobacco taxes were raised on my beloved cigars. But I do mind raising taxes on smokes — both ciggies and stogies — to pay for 
something not directly related to the social costs of those vices, such as lung cancer research, related health care or smoking prevention programs.
That is what is ready to happen in Congress. With a solidly Dem government, Nancy Pelosi et al. are using the opportunity to take up again the SCHIP bill, which President Bush vetoed last year. Here’s TBO.com on the legislation:
The bill uses tobacco taxes, including an extra 61 cents a pack on cigarettes, to expand an existing program providing health insurance for children of the working poor. It’s one of the most divisive issues Congress has considered recently.
The Democratic majority passed it in 2008 but couldn’t muster the votes to override former President George W. Bush’s veto.
This year, President Barack Obama says he’ll sign the bill. The House passed it Jan. 14, and it’s expected to come up for a Senate vote this week.
This is a pet project of Tampa Congresswoman Kathy Castor, whose mother, Betty, was the genesis for the program when she was a state elected official. Republicans have gripes; back to TBO:
Among the GOP arguments against the bill are:
• It doesn’t require strict documentation to prevent children of illegal immigrants from receiving benefits, only a verbal statement of a Social Security number; and it allows states to cover children of recent legal immigrants.
• Increasing tobacco taxes will put the burden of paying for the program on lower-income people, who are more likely to smoke.
• It raises income eligibility levels too high, allowing states to cover families up to three times the $22,050 federal poverty level for a family of four.
That, Republicans charge, would cut business for insurance companies because those families can buy insurance, and leave less money for benefits for the truly needy.
The Republicans (and yes it pains me to say this) are partially right. They are wrong about entitlement; Poor kids are entitled to these benefits. But we’re about to stick the cost of a social program to benefit poor children (a laudatory idea) onto the poorest folks, because they are the ones hit harder by a regressive tax and have fewer resources to try to quit. Just like we stuck some of the cost of education in Florida on lower-income gamblers with the state lottery.
Yes, I know, you are going to throw in my face that I’ve supported putting a cigarette tax increase on the table in Florida’s budget crunch, and yes, that tax increase would not be specifically tied to the social cost of smoking. But Florida’s tax increase would be spread over all government programs (including several that do deal with the cost of tobacco) instead of being designated to pay for a worthy, but unrelated, entitlement.
Finally, for stogie lovers, one of the provisions of the previous bill, a floor inventory tax that would have hit small cigar shops with millions of dollars in tax liabilities for their warehoused sticks, is out of this current bill:
For most of you reading this, the heart of the issue is what happens with large cigars, the category that includes premium sticks. One provision that could have devastated small cigar shops, a floor tax on inventory, has been shelved. And the plan to boost the cap on individual cigars—currently about a nickel—appears also to have been scaled back.
When President Bush vetoed the previous SCHIP bill, the cap was $3. There has been intense lobbying to push it down more. A few weeks ago, a number of reports put the cap proposal at $1. Over the weekend, a couple of retail shop owners told me they’d heard the cap would be 40-45 cents. A GOP staffer on the Hill told Patrick S on Monday that he was hearing cap figures between 39 cents and $1.
(photo credit: ulybug/flickr.com)
