According to the National Association of Tobacco Outlets (NATO), which opposes the legislation, the bill would increase the federal cigarette tax [image-nocss] from 39 cents per pack to $1 per pack. (Click on the Download Now button below to view the chart detailing the tax increases on all products).
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.
According toNATO's website, "If Congress passes the bill to expand the [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 House voted 289 to 139 for the new bill, and the Senate is expected to move swiftly on its version. The Senate Finance Committee is scheduled to meet on the legislation today.
The bill passed by the House bill aims to enroll about 11 million children into the program, compared to 6.7 million currently. The expanded program is paid for in part by raising the cigarette tax to $1 a pack from 39 cents. Taxes on cigars and other tobacco products also would rise.
The program is designed to provide health care to children in families unable to afford health insurance but who earn too much to qualify for the Medicaid health care program for the poor.
Republicans decried a lack of input into the Democratic-backed bill and argued that it would allow states to enroll too many families with incomes as high as $80,000. They also complained about a provision in the bill that would prohibit doctors from referring their patients to hospitals in which they have an ownership interest, saying it would stop construction of those facilities and force many to shut down. Republicans also expressed concern about a provision in the measure that would lift a ban on providing the benefit to legal immigrants who have resided in the United States for less than five years.
Despite those concerns, 40 Republicans joined majority Democrats to pass the bill.
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