NATO continues fight against tax hike on tobacco

The U.S. House voted Sept. 25 to expand the national health care plan that insures children, but the measure is expected to be vetoed by President Bush. The deadline to reauthorize the program is Sept. 30. The Senate is expected to pass the measure this week, according to news reports. mp2

The House voted to expand the State Children's Health Insurance Program, or SCHIP, by $35 billion over five years, funded by a $0.61 federal excise tax (FET) increase on cigarettes, according to tobacco industry analyst Bonnie Herzog of Citigroup Investment Research.

The National Association of Tobacco Outlets (NATO) on Sept. 26 urged its members to fax a letter to President Bush supporting a veto. NATO e-mailed the letter to members and asked each of them to sign it and fax it to the White House.

The letter reads, in part:

“As a business owner who sells tobacco products, I am writing to support your position that the State Children’s Health Insurance Program (SCHIP) legislation being passed by Congress will be vetoed.

The legislation would substantially increase the federal excise taxes on cigarettes, cigars, pipe tobacco, smokeless tobacco and roll-your-own tobacco and result in significant sales declines and economic hardships for our business. Moreover, the legislation would enact excessive tax increases on working Americans.

As you have publicly stated, the SCHIP program can be reasonably expanded without raising taxes at the same time. The federal government should not be attempting to federalize health care at the expense of working American adults who enjoy purchasing legal tobacco products.”

President Bush has said he plans to veto the bill. "Instead of expanding (the program) beyond its original purpose, we should return it to its original focus, and that is helping poor children, those who are most in need," he said, according to a Sept. 26 article by Zachary Coile of The San Francisco Chronicle. The White House said the Democratic legislation could allow families that earn as much as $83,000 a year to be eligible for insurance, but Democrats called that figure inflated, according to the Chronicle article.

In an earlier letter to the president, dated Sept. 21, NATO and other trade groups said they represent 135,000 convenience stores, gasoline service stations, tobacconists, truck stops, wholesalers, importers and manufacturers. That letter told the president that the trade groups “support your position announced [Sept. 20] during the White House press conference that the State Children’s Health Insurance Program (SCHIP) legislation being finalized by Congress will be vetoed.

“While our collective organizations do not oppose the reauthorization of the SCHIP program,” the Sept. 21 letter continued, “the provision to substantially increase the federal excise taxes on cigarettes, cigars, pipe tobacco, smokeless tobacco and roll-your-own tobacco would cause extreme economic hardships among our members and result in an excessive tax increase on working Americans.

“As a united voice for convenience stores, gasoline service stations, grocery stores, tobacconists, truck stops, wholesalers, importers, manufacturers, their employees and millions of customers, our organizations appreciate your position calling for a reasonable expansion of the SCHIP program without a corresponding tax increase,” the letter stated.

Joining NATO in signing the Sept. 21 letter were the following trade groups: American Wholesale Marketers Association; Cigar Association of America; National Association of Convenience Stores; Southern Association of Wholesale Distributors; Retail Tobacco Dealers of America; Petroleum Marketers Association of America; and National Association of Truck Stop Operators.