From expected sales drops to security issues, the Senate's approval [image-nocss] last week of an expanded State Children's Health Insurance Program (SCHIP) is a multilayered threat to the convenience-store and tobacco industries, according to Hoyt (pictured), president of Smoke N Go LLC, a chain of 18 smoke shop/convenience stores based in Abbeville, La.
"This is going to hurt small tobacco manufacturers, tobacco wholesalers and tobacco retailers," Hoyt said.
There are striking differences in reactions to the Senate approving the expansion of SCHIP, however, illustrating how hard not two, but three sides were fighting for or against the bill.
On the one hand, fans of universal insurance coverage saw the bill as an important first step for President Barack Obama to make good on his campaign pledge to cover all Americans. On another, the bill is a huge step toward reducing tobacco use. Finally, the bill is increasing federal excise taxes on all tobacco products, effectively pricing them out of reach for many consumers. If you're keeping score, that's two major groups (health insurance advocates and the anti-tobacco lobby) in favor of the bill and only one-companies relying on income from tobacco sales-against.
Tom Briant, executive director of the National Association of Tobacco Outlets (NATO), however, doesn't feel the issue is strictly a matter of being outnumbered.
"It's simply that the attitude toward tobacco is not changing, and that attitude is held too far and wide by a majority in Congress," Briant told CSP Daily News. "They simply see our products as a target for additional revenue."
The Senate voted 66-32 Thursday in favor of the bill, as reported in a CSP Daily News Flash Friday. Proposed amendments to the bill that would have lessened the blow to retailers were not included in the approved version.
The new cigarette federal excise tax (FET) amounts to a 156% increase over the current tax of 39 cents per pack, bringing the total FET for a pack of cigarettes to $1. To see other tax-rate changes that are part of the approved Senate bill, click the "Download Now" button below.
The Senate vote followed on an earlier approval of a similar bill by the House. Now the two bills will go before a conference committee to hammer out final legislation, back to each branch for a final vote, and finally land on Obama's desk for his expected signature as soon as this week.
"I don't foresee that there will be any changes and that it will breeze through that [process]," said Hoyt, a former U.S. congressman. "The president will sign [the bill], breaking his first pledge to the people of America by taxing the people that make less than $250,000 a year."
That's been one of the rallying cries of NATO as it encouraged retailers to call their representatives and urge them to vote against the bill.
Meanwhile, NACS, which also opposed the bill, has been stressing the security factor, according to Chris Tampio, senior director of government affairs of the c-store association.
"The No. 1 thing we talk about when we discuss excise tax increases is the way that government-state, local and federal-they're making tobacco a commodity, which is forcing people to the black and gray markets. People are buying on the Internet; they're buying illegally," Tampio told CSP Daily News. "[The industry] has done a great job to stop robberies over the past 10 years to protect cash and protect employees. Now people are robbing convenience stores, ignoring the cash and just taking cigarettes because they've created such a commodity. So we ask Congress, 'Are you trying to make our stores unsafe again?' "
Tomorrow, CSP Daily News will delve into several aspects of the FET increase, including:
How much are cigarette sales expected to drop? Are jobs at stake, and if so, how many? Which tobacco category will be hit hardest? (Hint: roll-your-own) What will the floor tax mean to retailers? Is there an up side?
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