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SCHIP Tobacco and Cigarette Tax

SCHIP Passed

Update February 2009

Under the final, approved SCHIP legislation, effective April 1, 2009, the excise tax on large cigars will increase from the current rate of 20.719%, with a per cigar cap of 4.875 cents to 52.75%, with a cap of 40.26 cents. SCHIP does not include a floor stocks tax on large cigars.

The excise tax on:

  • Little cigars will be increased from $1.828/thousand to $50.33 per thousand.
  • Cigarettes will increase from $19.50/thousand to $50.33/thousand (or from 39 cents per pack of 20 to $1.01 per pack of 20).
  • Moist snuff will increase from 58.5 cents per pound (roughly 4.3 cents per can) to $1.51 per pound (roughly 11.3 cents per can)
  • Chewing tobacco will increase from 19.5 cents per pound (roughly 3.6 cents per 3 oz pouch) to 50.33 cents per pound (roughly 9.5 cents per 3 oz pouch)
  • Pipe tobacco will increase from $1.0969 per pound to $2.8311 per pound
  • RYO will increase from $1.0969 per pound to $24.78 per pound

While there is no floor stocks tax on large cigars, there is a floor stocks tax on all other tobacco products. Retailers, wholesalers and other entities in possession of tobacco inventory (of "other tobacco products") as of March 31, 2009 will be required to pay the floor stocks tax by August 1, 2009.

Another CIGAR TAX
Now is the time to stop them!

20,400% tax increase on cigars
(Originally proposed SCHIP Cigar Tax)

Just imagine a $10 dollar tax, PER CIGAR!!!
(Thanks to you it may stay in our imagination)

Update: January 24, 2008:The U.S. House of Representatives again failed to win over enough votes to override President Bush's veto of a children's health insurance bill Wednesday.

Update: January 23, 2008: The U.S. House of Representatives will vote today in an attempt to override President Bush's third veto of the now controversial State Children's Health Insurance Program (SCHIP). The president has previously vetoed two other SCHIP proposals. Popular consensus remains that today's congressional attempt to override the president will again fail, for a third time. Last month, President Bush did sign into law a bill extending the current SCHIP program until March 31, 2009.

Update: December 29, 2007: No new taxes - SCHIP Extended not Expanded! President Bush signed legislation that extends a popular children's health insurance program after twice vetoing attempts to expand it. The extension of the State Children's Health Insurance Program is expected to cover 6.6 million children and provide states with enough money to cover those enrolled through March 2009.

Update: December 12, 2007: As reported by CBS News, President Bush has, once again, vetoed the SCHIP Bill, which would have expanded the children's health insurance program on the backs of the tobacco industry. With a little over a week left in the congressional session, it's not clear if Congress will even bother to schedule a veto override vote that is guaranteed to fail. Thus, after all the work by Congress in this session, it appears the debate over SCHIP will remain a hotly contested political issue throughout 2008.

Update: September 20, 2007 - Thanks to your calls and letters things have settled down a bit. Existing proposals are now much reduced from the original 20,400% increase. The Senate and House have worked out a combined bill but it is still expected that President Bush will veto the legislation and the House should not have enough votes to override the vetol.

The bottom line: The politicians want to do what is "best" for you and control what you do by taxing tobacco to "help you quit smoking". What "undesirable" behavior will be taxed next?

Update: August 29, 2007 - Nothing new to report, just waiting for their return after the Labor Day weekend.

Update: August 21, 2007 - HR3162 -House of Representatives passes the SCHIP legistlation by a vote of 225 to 202. Good news is that a Presidential veto will probably not be over turned in the House. The Senate Bill passe the SCHIP legistlation by a vote of 68 to 31. Now any differences will need to be worked out by a committee of Senators and Representatives before it is sent to the President, where a veto is expected.

Update: July 24, 2007 - The House Energy and Commerce Committee Chairman’s bill to renew SCHIP was introduced on July 24, 2007. Contact your Congressperson U.S. House of Representative also.

Update: July 21, 2007 - It appears President Bush is opposed to the Senate recommended expansion of the SCHIP program and is also against the increase of the Tobacco tax. Sources indicate he will VETO the bill if it is passed by the US Senate. 67 Senators will be needed to override the VETO. Your voice will be heard, contact your Senator now and tell them to stop this unfair tax!

Update: July 20, 2007 - Looks like the Senate Finance Committee approved the SCHIP reauthorization and funding bill (Tobacco Tax) on a vote of 17-4. This Bill should go to the full senate very soon, so it is important that you contact your US Senator and tell them how you feel.

July 19, 2007 - Currently before the United States Senate is a proposal to fund health insurance on the backs of tobacco products. Tax rate on cigars will be 53.1% on top of any State and Local taxes

This legislation is called SCHIP (State Children’s Health Insurance Plan). The bill is expected to come to the Senate floor for a vote before the end of July. We urge you to leave a message for both of your U.S. Senators today and express your opposition to funding "SCHIP legislation" with punitive cigar taxes

Do not stop now! There is alot of work ahead to stop the proposed federal tax increase on premium cigars and pipe tobacco! .

The SCHIP bill will go to the Senate floor for a vote perhaps as early as next week but before August 3 when the Senate and House adjourn for the month. The Senate may or may not amend the Finance Committee bill when it reaches the floor.

However, the Senate bill is not the final word. The process then switches to the House where the Ways & Means Committee's SCHIP proposal will be reported out of committee, it will be voted on by the full House -- where concern has already arisen about the magnitude of the proposed tax increases. Because there will be differences between the House bill and the Senate bill, a conference committee consisting of representatives from both bodies will meet to resolve those differences. What they end up with will be voted straight up or down by the Senate and the House. Then the measure goes to the President, who is adamant that he will veto any major expansion in SCHIP. Assuming he vetoes the bill, then the Senate and House have to muster a 2/3 majority to over-ride the veto. While the Congress must act before the current SCHIP program expires at the end of September, the outcome at this time is far from being decided. One possible scenario is that the Congress ends up passing a simple one-year extension of the current program.

Although we have no indication as to when the SCHIP legislation will be brought to the Senate floor for a vote, action is beginning in the House where the Energy & Commerce Committee is scheduled to consider its own measure - minus the revenue provisions. The House Ways & Means Committee will then to mark up the revenue provisions. At this time we have no specifics regarding the increase in tobacco taxes, although we understand there is some concern about the size of the tobacco tax increases in the Senate bill and about how cigars are treated in that measure. Furthermore, tobacco taxes will not be the only source of funding in the House legislation.

There is speculation that the Democratic leadership wants to try to pass the SCHIP bill before the August 3 recess so that the Democrats can add it to their list of achievements before they go home to face their constituents. If the House and Senate enact legislation before August 3, a conference committee is likely to meet in September to resolve the differences between the two measures.

How they voted
House of Representative SCHIP Roll Call Vote
U.S. Senate SCHIP Roll Call Vote

Click here and leave a message for your U.S. Senator.
Click here to contact your Congressperson in the U.S. House of Representatives

Previous Updates:

Update: August 29, 2007 - Nothing new to report, just waiting for their return after the Labor Day weekend.

Update: August 21, 2007 - HR3162 -House of Representatives passes the SCHIP legistlation by a vote of 225 to 202. Good news is that a Presidential veto will probably not be over turned in the House. The Senate Bill passe the SCHIP legistlation by a vote of 68 to 31. Now any differences will need to be worked out by a committee of Senators and Representatives before it is sent to the President, where a veto is expected.

Update: July 24, 2007 - The House Energy and Commerce Committee Chairman’s bill to renew SCHIP was introduced on July 24, 2007. Contact your Congressperson U.S. House of Representative also.

Update: July 21, 2007 - It appears President Bush is opposed to the Senate recommended expansion of the SCHIP program and is also against the increase of the Tobacco tax. Sources indicate he will VETO the bill if it is passed by the US Senate. 67 Senators will be needed to override the VETO. Your voice will be heard, contact your Senator now and tell them to stop this unfair tax!

Update: July 20, 2007 - Looks like the Senate Finance Committee approved the SCHIP reauthorization and funding bill (Tobacco Tax) on a vote of 17-4. This Bill should go to the full senate very soon, so it is important that you contact your US Senator and tell them how you feel.

July 19, 2007 - Currently before the United States Senate is a proposal to fund health insurance on the backs of tobacco products. Tax rate on cigars will be 53.1% on top of any State and Local taxes

This legislation is called SCHIP (State Children’s Health Insurance Plan). The bill is expected to come to the Senate floor for a vote before the end of July. We urge you to leave a message for both of your U.S. Senators today and express your opposition to funding "SCHIP legislation" with punitive cigar taxes.