WASHINGTON -- The U.S. Senate plans to vote on the 2009 legislation to expand the State Children's Health Insurance Program (SCHIP) as early as Friday of this week or by early next week, according to the most recent issue of NATO E-News from the National Association of Tobacco Outlets. The tobacco tax increases slated to pay for the expansion will break President Obama's promise to not raise taxes on Americans earning less than $250,000 and will lead to price increases in tobacco products causing large sales declines and employees losing their jobs.
And if Congress [image-nocss] approves the bill by significantly increasing federal cigarette and tobacco taxes, the result will be major sales reductions, massive layoffs, numerous store closings and many more robberies because of the much higher value of tobacco products, predicted Scott Ramminger, president of the American Wholesale Marketers Association (AWMA) in an opinion piece in The Buffalo News.
NATO has been conducting a campaign to notify U.S. senators and to encourage members, their employees and their customers from every state to contact their senators to tell them to oppose the tax increases, and to do it again if they have already done so.
Also, NATO is encouraging members and others to go to the "Contact Us" button on the White House website, www.whitehouse.gov, to convey the message to the president.
Click on the Download Now button below for NATO's letter to Senators and their contact information.
Ramminger is president of the American Wholesale Marketers Association. His opinion piece predicting layoffs and more in the Buffalo News reflects the stand of the Southern Association of Wholesale Distributors, the National Association of Convenience Stores, Petroleum Marketers Association of America, the National Association of Tobacco Outlets and the National Association of Truck Stop Operators.
The trade organizations represent more than 135,000 local retailers, wholesalers, importers and manufacturers, all of whom oppose the magnitude of the cigarette and tobacco tax increases to expand SCHIP, he said.
"Our organizations support the reauthorization and/or expansion of the SCHIP. What we oppose is substantially raising the federal excise tax on cigarettes, cigars, pipe tobacco, smokeless tobacco and roll-your-own tobacco to fund the expansion. The economic impact on the entire tobacco industry will be disastrous.
First, a 156% tax rate increase on cigarettes compounded by tax rate increases of up to 6,000% on large cigars, 2,197% on little cigars, 710% on roll-your-own tobacco, 156% on smokeless tobacco and 156% on pipe tobacco will lead to declines of 10% or more in retail sales of tobacco. This large reduction in sales will have a corresponding impact on industry jobs.
According to 2002 U. S. Census Bureau statistics, 1.17 million union and non-union employees are employed by tobacco manufacturers, wholesalers and retailers. With upward of a 10% decline in tobacco sales, industry estimates project up to 117,000 jobs will be lost.
Second, the SCHIP tax increases will significantly raise the value of tobacco products held in inventory. The unintended consequence will make warehouses, delivery trucks and retail stores more likely targets for crime.
Third, the escalation of taxes on tobacco products will lead to a corresponding rise in purchases of tobacco products by consumers over the Internet and on the black market, where vendors illegally sell tobacco products tax-free and do not verify a customer's age to avoid selling to minors.
Finally, because most Americans who buy tobacco are in the low or middle- income range, raising tobacco taxes will affect the poor more disproportionately.
President-elect Barack Obama needs to keep his campaign promise and not raise taxes, including cigarette and tobacco taxes, on any American who earns less than $250,000.
Our organizations implore Congress to reauthorize SCHIP without imposing disastrously large tax increases on tobacco products."
[EDITOR'S NOTE: A free website, www.stoptheFETincrease.com, hosted by Altria Client Services and Philip Morris USA, provides a simple, fill-in-the-blank form to allow retailers to voice their displeasure with the bill. Retailers can also call a hotline at (866) 527-4494 to reach out to their legislators.]
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