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Tobacco Manufacturers, Wholesalers, Retailers, Their Employees & Customers Must Call Their U.S. Senators and President-Elect Obama!

Today, the 2009 legislation to expand the State Children’s Health Insurance Program (SCHIP) was released by the U.S. House of Representatives. The proposed tax increases on tobacco products have changed somewhat as shown in the chart below. Several changes to the tax increases include a $.40 cap per large cigar and the roll-your-own tobacco tax increasing from $1.0969 per pound to $24.62 per pound!  The 2007 version of the SCHIP bill had roll-your-own tobacco being taxed at a new rate of $8.9286 per pound.

If passed, the bill becomes effective April 1, 2009 and assesses a floor stocks tax on all manufacturers, wholesalers and retailers for the tobacco products (except large cigars) in inventory on April 1, 2009 with the floor stocks payable by August 1, 2009.

Every tobacco manufacturer, wholesaler, retailer, their employees and customers need to call their two U.S. Senators from their state and urge them to oppose the tax increases to fund SCHIP.  A list of U.S. Senators by state accompanies this bulletin.  Leave a message with each senator’s staff that the SCHIP tax increases will result in large sales declines, employees being laid off and bankrupt retailers and wholesalers due to the floor stocks tax. 
Nationwide, up to 117,000 American industry jobs will be lost.

When calling, listen to the message and Press 2 to speak to a live person.  Tell the staff person that President-Elect Obama needs to be a man of his word and keep his campaign promise not to raise taxes on any American making under $250,000 a year and that this includes not raising cigarette and tobacco taxes to fund SCHIP.  Do not allow the staff person to refer to you President-Elect Obama’s website to e-mail your message.  Tell the staff person that the SCHIP bill will raise taxes on 43 million Americans who buy tobacco products and President-Elect Obama needs to find a different way to fund the SCHIP program.

If Congress passes the bill to expand the State Children’s Health Insurance Program (SCHIP) by significantly increasing the federal cigarette and tobacco taxes, the fallout from this expansion of government subsidized health care will likely include major cigarette and tobacco sales reductions, large increases in the number of store robberies because the value of tobacco products would be so high, a floor stocks tax on cigarette and tobacco inventory adding up to an estimated $5,000 per store, employee layoffs and even store closings.

The SCHIP program is a top priority for Democrats and may result in the single largest tax increase on one industry’s products in the history of the country. With President-Elect Obama a supporter of SCHIP, the possibility of a tobacco tax increase to fund the expansion looms large even though Obama made campaign promises not to increase taxes on any one who earns less than $250,000. The 2007 SCHIP bills proposed the following increases in the federal tobacco excise tax rates:

NATO’s legislative staff members are sending out to association members customer alert sheets to place on store counters and personalized letters addressed to each retailer and wholesaler’s particular U.S. Senators and Representatives. NATO members need to call their Congressional representatives, urge their employees and customers to do the same and fax the personalized letters to Washington, DC. All the names, phone and fax numbers of the particular Congressional representatives are being provided. NATO members need only dial the phone and fax the letters. Your voice and the voice of your customers need to be heard.

No one can say with 100% certainty how the SCHIP legislation will finally be resolved by Congress in 2009. What can be said is that the SCHIP bill is just the beginning of what will be a turbulent year for the tobacco industry. With some in Congress supporting federal cigarette and tobacco tax increases to expand SCHIP and more than 30 states with large budget deficits some of which will also propose higher tobacco taxes as well, NATO wants to remind its members that they must continue to contact their elected officials to be heard on tobacco issues. Maintaining that dialogue and urging customers to make phone calls continues to be an important part of opposing unfair tobacco legislation.

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