A Tax Hike from the Bush Administration?

The Interagency Committee on Smoking and Health (ICSH), an advisory group commissioned by the Department of Health and Human Services, will recommend to President Bush that he raise the federal excise tax on a pack of cigarettes by $2, from 39 cents to $2.39 a pack, to fund anti-tobacco efforts.

CSE urges President Bush to reject this stunning $28 billion tax increase that will hit lower income and working Americans the hardest.

CSE believes that enacting a five-fold federal tax increase on cigarettes is the wrong remedy for this advisory group’s concerns about anti-tobacco education funding. Both state and federal governments presently have adequate financial resources to invest in programs to curtail smoking. Specifically, in 1998 state governments and the tobacco industry agreed to a tobacco settlement, which will span 25 years at a cost of $246 billion, with a significant portion of that settlement allocated to state anti-smoking efforts.

Moreover last year, 21 states and the District of Columbia decided to raise tobacco taxes; in 2003, the states will generate $11.6 billion in excise tax revenue. Coupled with the $8.7 billion in tobacco settlement proceeds, the states will acquire more than $20 billion in tobacco related income in 2003. Certainly the states have enough funds to invest in their own anti-smoking campaigns without the need for more federal assistance by way of a $2 tax increase.

Countless studies demonstrate that cigarette taxes are one of the most regressive taxes in the United States, affecting millions of low and middle-income families. It is estimated that individuals earning $30,000 a year or less pay about 50 percent of the excise taxes placed on a pack of cigarettes. Given the aggressive moves by the states to raise their own cigarette taxes, it’s particularly bad timing to suggest placing an additional federal tax burden on lower-income Americans

CSE President Paul Beckner had these comments:

“CSE strongly urges President Bush to stick to his fundamental belief in lower taxes for all Americans and reject the ICSH proposal. This five-fold tax increase is wrong. Tobacco taxes not only punish people for engaging in a completely lawful activity, but they also heavily penalize lower and middle-income Americans because these tax are so regressive. Nearly 50 percent of the revenue generated from tobacco taxes comes from individuals making $30,000 or less.

“CSE urges the president to stop this attempt to raise taxes on Americans during these difficult economic times.”

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