Tuesday, July 24 2007
Following is the lastest update from the Cigar Association of America on the SCHIP legislation cigar tax:
In the accompanying .pdf document are the tobacco tax increases in the legislation which the House Ways & Means Committee is scheduled to mark up at 1 pm tomorrow (Thursday). Briefly, the proposed increase for cigarettes is $.45 to a new rate of $.84 per pack. Small cigars would be taxed the same as cigarettes ($42 per thousand or $.84 per pack of 20).
Large cigars would be taxed at 44.63% of the manufacturer's or importer's sales price with a cap of $1 per cigar. (Note: There is no change in how the tax is computed. The tax base is the manufacturer's or importer's selling price before the excise tax is included.) A cigar will reach the $1 cap at a sale price of $2.24, before the excise tax is included.
The tax on moist snuff would go to $1.26 per lb. The tax on chewing tobacco would be $.42 per lb., pipe tobacco - $2.36 per lb., and roll-your-own - $7.4667 per lb. As in the Senate proposal, cigar tobacco used for ryo purposes and cigar wrappers would be included in the definition of roll-your-own tobacco and thus be taxed at the new rate.
As in the Senate bill, the increases would be effective January 1, 2008. Note that the House bill would impose a floor stocks tax on cigarettes only, as was the case with the tobacco tax increases in 2000 and 2002. However, if this provision is included in the final House bill, the issue would have to be resolved in a Senate/House conference committee because the Senate measure imposes floor stocks on all tobacco products. So, a company cannot operate on the assumption that there will not be a floor stocks tax on other tobacco products.
We are still seeking reductions in the excise tax increases on cigars. To that end, we will be sending another email with contact information and talking points for members of the House Ways & Means Committee.
If you have Adobe Reader, you can view the entire House_SCHIP_taxes document.
