6 Mar 2014
When he was running for president in 2008, Senator Obama promised not to raise “any taxes” on families making less than $250,000. Fifteen days after being sworn into office, he broke that pledge by signing the SCHIP bill that included a major increase in federal tobacco taxes.
Now, five years into his presidency, Obama (himself a longtime cigarette smoker) has proposed raising taxes further. His proposed budget for fiscal year 2015 includes a 94% increase in tobacco taxes.
For cigarettes, the federal rate would jump from $1.01 to $1.95 per pack, up from 39 cents per pack in 2008. The new excise tax rates would then be increased annually to account for inflation. The rate on cigars, which is a percentage of sales as opposed to a per-unit tax, would increase proportionally, presumably with the tax cap jumping from 40 cents per cigar to upwards of 75 cents.
According to an IPCPR statement, in FY2015 the proposed tax hike is estimated to raise $78.217 million over 10 years, which the budget says would be used to fund pre-K education.
Fortunately, this budget has pretty much zero chance of passing in its current form. As the IPCPR notes in its statement, “IPCPR does not expect this proposal to be approved by the Republican-controlled House of Representatives, but it does demonstrate that the entire suite of tobacco products is going to be on the table when legislators are searching for revenue to fund unrelated programs.”
And that is exactly the key takeaway. President Obama has repeatedly promised that tax hikes wouldn’t impact anyone not in the highest income percentiles. But, like so many areas, there’s an unwritten asterisk when it comes to tobacco.
Tobacco taxes disproportionately impact lower income income Americans, and that doesn’t include the lower income people in other countries who would lose their jobs as consumption is reduced by the high prices of increasingly climbing taxes. Yet, even a president who says he only wants to target the wealthiest Americans with higher taxes feels free to target those with lower incomes if they smoke.
Ultimately, the key point is that cigar smokers (and other tobacco users) need to make it clear to their elected officials that they are taxed enough already. If something (whether it be pre-K education or anything else) is worth paying more taxes for, then they should seek to pay for it out of taxes that impact everyone, not taxes targeted at a minority that already pays more their than their fare share.
photo credit: Lisa Jack