Thursday, June 3, 2010

$250 Million Loophole in Child Health Law

Back in February 2009, President Obama signed the State Child Health Insurance Program (SCHIP) Bill into law. This was a program that expanded healthcare coverage for children by increasing the Federal Tobacco Tax by $.62. According to a recent Associated Press article a large loophole left in the law has cost the government nearly $250 Million in the first year. The so-called loophole is around the labeling and taxation of roll your own and pipe tobacco. Roll your own tobacco was included in a large increase while pipe tobacco was not. Companies simply changed the name of their product and avoided the increased tax. 

During the last year there have been record increases in the sale of pipe tobacco while there has been a significant drop-off in the sales of roll your own tobacco. As discussed on our blog what really is the difference between these two products?

In the interest in tax fairness this loophole needs to be closed. 
To read the AP article click here.

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