Tuesday, November 24, 2009

Big Tobacco Circumventing New Federal Tobacco Tax Laws

A recent Associated Press Article highlights the dubious tactics of Big Tobacco when it comes to the new federal tobacco taxes. By changing the marketing Big Tobacco has been avoiding paying hundreds of millions of dollars in tobacco taxes annually. The Children Health Insurance Plan (CHIP) has quite a bit to lose becuase of Big Tobacco's dirty tricks. When taxes saw a significant jump on the roll-your-own variety of tobacco, BIg Tobacco made a quick switch. Roll-your-own varieties were replaces with the less-taxed, less-restricted pipe tobacco variety. Pipe tobacco is typically coarser and moister. However, that is an industry standard, not a legal one. The distinction that the federal government makes is exclusively in the labeling of the products. Retailers simply redirected their customers to the new pipe tobacco which would be cheaper and comparable.

What is the difference?

One is pipe tobacco (to the left), the other roll your own tobacco (to the right). The bigger difference comes in the way that they are taxed. Roll-your-own tobacco is taxed at $24.78 per pound whereas pipe tobacco is taxed at $2.8311 at the federal level. Clearly there needs to be some changes made to this taxation system at the federal level. To learn more about federal taxes on tobacco products see this chart.  Leave it to Big Tobacco to find a way to circumvent nearly every public health law.

No comments: