FreedomWorks Opposes New Tax Mechanism in H.R. 1108

Currently the House is marking up H.R. 1108, the “Family Smoking Prevention and Tobacco Control Act,” in the Health Subcommittee of the House Energy and Commerce Committee. As with the Senate version of the bill, the House bill includes language that allows the Food and Drug Administration (FDA) to impose new “user fees” to cover the costs of its expanded regulatory program. However, language added in a manager’s amendment expands the amount of fees that may be collected by the FDA to offset a projected loss of excise tax revenue resulting from the program. At this point, the user fee would no longer be a “fee for service’ that covers the agency’s costs—it would be a new tax.

The Congressional Budget Office (CBO) reviewed S. 625, the Senate companion bill to H.R. 1108, and found: “S. 625 also would require that FDA further increase aggregate assessments authorized under the bill by 42.174 percent each year. Additional collections generated by the adjustment would be deposited in the general fund of the Treasury. In total, we estimate that implementing the bill would increase federal revenues from assessments on manufacturers and importers of tobacco products by $3.1 billion over the 2009-2013 period and by $7.6 billion over the 2009-2018 period.” [emphasis added]

“FreedomWorks opposes such a tax hike and urges the Committee to reject any hidden taxes,” said Matt Kibbe, President of FreedomWorks. “As it stands, such a proposal raises serious constitutional concerns with respect to both a federal agency’s ability to tax and congressional oversight. First, the Constitution requires all tax increases to be initiated in the House of Representatives, the legislative body closest to the people. Tax bills start in the House Ways and Means Committee, which has not even looked at this proposal. Second, relying on a ‘user fee’ to collect general revenues is bad public policy that diminishes congressional oversight of the agency. Congress has the responsibility of authorizing programs and appropriating the necessary resources to fund them. Putting government agencies on autopilot through ‘user fees’ that contribute to the general fund dodges important decisions about government spending that Congress needs to address.”

“In Congress’s on-going crusade against tobacco smoking, it seems only fair that legislators should be expected to kick their own addiction to the tax revenue generated by tobacco. Taxpayers have made it clear that earmarks and excessive spending are a problem. Any offset required by PAYGO should come out of excessive Congressional spending. Instead of answering the tough questions about how to spend taxpayer money wisely, this proposed legislation simply adds a hidden tax so the spending can continue.”

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