Monday, January 12 2009
Source:
IPCPR
The latest version of the State Children's Health Insurance Program (SCHIP), HR2, has been officially introduced in House Ways & Means Committee. The industry compromise on the revised tax rate on large cigars has been incorporated into HR2. The new tax rate will be 52.4% with a maximum tax
cap on any one cigar at 40 cents per cigar.
In previous versions of SCHIP legislation, the tax cap rate held at $3 per cigar. The trade association and its federal lobbyists, working in conjunction with the Cigar Association of America, our industry came together to agressively challenge the distasterous, proposed $3 tax cap, and get the substantially reduced to the more sustainable 40-cent tax cap.
The IPCPR also recognizes the work of the associate members of the association who were a key component in educating to Congress on our industry. Thanks to our retail members and their customers for supporting our aggressive grassroots efforts.
While HR2 looks to breeze through the House, it may have a slower journey through the Senate, though we do not expect any direct changes to the tax cap rate.
SCHIP Legislation Details
- The new tax rates are effective April 1, 2009
- The cigarette tax rate goes from $.39 per pack to $1.00 per pack
- The tax on snuff goes from $.585 per pound to $1.50 per pound
- The tax on pipe tobacco goes from $1.0969 per pound to $2.8126 per pound
- The tax on RYO goes from $1.0969 per pound to $24.62 per pound (not a typo).
Additionally, the definition of RYO has been expanded to include cigar wrappers to address the "blunt wraps" issue.
The tax change to small cigars (cigars weighing less the three (3) pounds per thousand will be phased in over five (5) years at the following rates per year:
2009 & 2010 - $.25 per pack
2011 & 2012 - $.50 per pack
2013 & 2014 - $.75 per pack
2015 and beyond - $1.00 per pack
We were successful in continuing to have the floor tax NOT apply to large cigars; however it does pertain to any other tobacco products. £
The International Premium Cigar & Pipe Retailers Association (IPCPR) is a not-for-profit trade association organized as the advocate for the independent retail tobacconist and recognized as the "Voice of Authority and Reason" on premium tobacco related issues.
