Tax avoidance scheme by small tobacco companies is legal but worrisome
Jump to full article: Las Vegas Sun, 2009-11-21
Author: Future
Intro: The federal government should have known how small, independent tobacco companies would react when it disproportionately increased the tax on their primary product.
These companies specialize in making tobacco for roll-your-own cigarettes, whose sales had been growing because they are cheaper than packaged cigarettes. But Congress and President Barack Obama this year raised taxes on all tobacco products in order to expand a program that subsidizes children’s health insurance. . . .
The Associated Press reported that the federal treasury could be shorted hundreds of millions of dollars a year if the labeling switcheroo stands. And there is another problem, as worrisome as the loss in taxes. Flavored cigarettes, which attract children, are banned by the Food and Drug Administration. But that ban does not extend to pipe tobacco. This opens the possibility that so-called pipe tobacco could soon be on store shelves in various flavors, an incentive for children to roll their own.
“This is a direct challenge to the federal government,” Matthew Myers, president of the Campaign for Tobacco Free Kids, told the AP.
Certainly the government should address this unforeseen strategy by the independent tobacco companies. Perhaps the tax on roll-your-own tobacco could be reduced somewhat, as it is inordinate. And without question, “pipe tobacco” needs a clear definition.
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