S-CHIP Expansion bill, will increase taxes on tobacco products starting April 1
AMARILLO, TEXAS -- The passage of the SCHIP expansion bill was viewed by many as a major victory for uninsured children, but the bill includes major tax increases for tobacco products.
The new federal law was one of the first bills signed by President Barack Obama. The bill calls for an expansion of the state children's health insurance program or SCHIP. The problem was the cost of the bill, and that's where the tobacco tax comes into play.
The new tax is designed to help offset costs and help fund SCHIP. The program is funded by a mixture of federal and state dollars.
Local congressman Mac Thornberry voted against the bill, saying he didn't agree with the tax increase especially in times like this. He also added that the expansion should have focused more on the children who qualify for the SCHIP program but aren't signed up.
Local cigar shop owner, Danny Jones, of Jones Cowan Tobacco, showed ProNews 7 a chart of the tax increases that his industry is facing.
Here is a list that breaks down the new taxes and how it will affect consumers.
Cigarettes will go up and additional $.60 cents per pack. From $.39 cents of tax collected to $1 per pack.
Cigars will go up individually based on price, the average cigar will go up $.40 to $.60 cents per cigar.
Roll-your-own tobacco will have the largest increase. It goes up 2,000 percent, and the tax will actually cost more than the tobacco. The tax went up from $1.10 per pound of rolling tobacco to $24.78 per pound.
"We have seen state taxes increase since I've been in business, but we've never seen anything to this magnitude, particularly the 2,000 percent category," said Jones. "Some roll-your-own companies will probably go out of business. I think that it's one thing for the economy to affect people's jobs -- it's another thing for taxes to put them out of business."
The new taxes and price increases start up April 1. The tax will definitely affect smokers and tobacco users nationwide. Tobacco dealers will be watching closely to see how consumers react to the new price tag.
"I'm sure it's going to affect our business. I'm sure that there are going to be some people that just can't afford the tobacco," said Jones.
