I’m in the Washington Examiner today arguing against taking calorie labeling laws national:
Among the many proposals under heated debate between the House and Senate health care bills is one provision both sides will likely support: a national law mandating calorie labels on chain restaurant menus and in vending machines.
Advocates have described the measure as a symbolically important step against obesity and have spun recent research in their favor, but a closer look reveals a weak case for labeling.
Read the whole thing here.
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This was only a matter of time:
On January 13, 2010, Rep. Steve Cohen (D-TN) and co-sponsor Rep. Lloyd Doggett (D-TX) introduced bill H.R. 4439 to congress to raise the federal pipe tobacco tax from $2.8311US per pound to $24.78US per pound and “To amend the Internal Revenue Code of 1986 to impose the same rate of tax on pipe tobacco as is imposed on roll-your-own tobacco.”[...]
If this bill passes, the average increase to your favorite blends will be about:
$2.43US per 50gr
$2.74US per 2oz
$4.86US per 100gr
$10.98US per 8oz
$21.95US per 16oz
$24.15US per 500gr
These prices would be added onto the price you are currently paying for those amounts of pipe tobacco. So with the average price of 100gr tin McClelland Frog Morton being about $13.20US, the new price would be $18.06US! That is outrageous!
The motivation for the tax increase is to stop producers of roll-your-own tobacco (RYO) from repackaging their product as pipe tobacco, which is taxed at a lower rate. The two products are very similar and in the past were taxed at the same rate of $1.10 per pound. SCHIP created a huge disparity by raising the tax on pipe tobacco to $2.81 and the tax on RYO to an astronomical $24.62. RYO producers predictably reclassified their products just to keep their companies alive.
The congressmen introducing this bill are correct that the two types of tobacco should be taxed equally, but the solution is to lower the tax on RYO, not to tax both products at the insane new rate.
[Hat tip to the ever-alert Jan!]
Previously:
SCHIP tax avoision
Children, say “thank you for smoking”
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One of Obama’s first acts in office is likely to be approving an expansion of the State Children’s Health Insurance Program. Since SCHIP is “for the children” and will be funded by taxing unpopular smokers, passage in Congress is a sure bet, as is Obama’s signature.
Full details of the House bill won’t be available until tomorrow (Tuesday), but according to George Edmonson at Stogie Guys a potentially devastating blow to small businesses has probably been dodged: the floor tax that might have applied to current stocks of cigars held by tobacco shop owners. Additionally, there’s speculation that the cap on taxing individual cigars will drop from the $3 per stick that was vetoed by George Bush last year, which was itself down from an original $10 proposed cap. Read George’s post for details.
That’s the good news. The bad news is that taxes on tobacco are still going to rise, making cigars more expensive and significantly increasing the price of cigarettes. The latter is a consumption tax that will fall disproportionately on the poor, marking a painfully regressive start for the incoming administration. See Jacob Sullum on this point here.
Regardless of SCHIP’s merits, it shouldn’t be funded by additional taxes on tobacco. As Tom Firey and I wrote for the Cato Institute last year:
Smoking in the United States is already declining significantly — largely as a result of public awareness of its dangers, not higher taxes. The declining number of smokers makes cigarette tax revenue unstable. Congress’s Joint Committee on Taxation projects that if the new tax rate is implemented next year, tobacco revenues will fall nearly 10 percent over the next decade…
SCHIP’s advocates believe the program is critical to providing healthcare to children. That’s debatable. But if Congress and the president decide to expand the program, they should cover its new costs with general tax revenues, not taxes on smokers alone. Higher tobacco taxes are unfair, unadvisable, and unlikely to bring in enough money.
I don’t have any special insight into SCHIP as health policy. For a critique and some alternative approaches, see Michael Cannon.
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Jacob Grier is a freelance writer, barista, mixologist, and magician in Portland, OR. He writes, eats, and drinks a lot. His articles have appeared in The Washington Post, Reason Online, The Oregonian, and other publications.
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