By Rick Dandes
The Daily Item
Valley smokers are incensed at two congressional Democrats’ proposal to increase the tax on pipe tobacco a whopping 775 percent.
Ron Rothermel, of Sunbury, is among Valley pipe smokers outraged by the plan to raise the tax from $2.8311 per pound to $24.78 per pound — the same rate that is imposed on roll-your-own tobacco products.
Many Valley smokers saw an opportunity to save money by buying special blends of pipe tobacco to make their own cigarettes after a higher roll-your-own tobacco products tax took effect last year.
“I smoke cigarettes and occasionally pipes,” Rothermel said. “I wish I hadn’t started smoking, but I did, and I resent the government’s actions. I feel they are picking on a certain class of people and taxing that class. The proposed tax is ridiculously high. It certainly could affect whether I buy pipe tobacco in the future.
“If this tax passes,” he fumed, “what’s next? Since excessive intake of sugar is unhealthy and leads to obesity, will they tax sugar? And what about fried foods? Are they going to tax french fries?”
Where is it all going to stop? Rothermel asked.
The widespread anger is a reaction to House Resolution 4439, or the Tobacco Tax Parity Act of 2010, introduced by U.S. Reps. Steve Cohen, of Tennesee, and Lloyd Doggett, of Texas.
Cohen, reached Friday in Washington, D.C., said the idea for his bill originated last year, after passage of the Children’s Health Insurance Program (CHIP) Reauthorization Bill, which increased tobacco taxes to provide tens of millions of America’s children with health insurance.
Since its creation in 1997, CHIP has been funded through revenue generated by federal tobacco taxes.
As part of the CHIP law, roll-your-own tobacco is taxed at a $1.54 an ounce, while pipe tobacco — the exact same product — is taxed at 17 cents an ounce, Cohen said.
“Higher cigarette taxes have proven to be an effective way to discourage children from smoking,” Cohen said. “However, it was only weeks after President Obama signed the Children’s Health Insurance Program into law that the tobacco industry figured out a way to exploit a loophole in the bill that endangers the health of children.
“Roll-your-own tobacco has historically been a small part of the cigarette industry,” Cohen said, but “the exploitation of this loophole enabled roll-your-own tobacco to capture an increasingly large portion of the market. Further exploitation of this loophole has the potential to cost the government more than $30 million a month in lost revenue.”
Instead of folding in the face of high taxes, tobacco companies quickly responded to the roll-your-own tax increase by all but shutting down those brands and reinventing them under a less-taxed category — pipe tobacco.
The tax? About a tenth of roll-your-own tobacco, at $2.83 per pound.
Smokers of pipes and cigarettes responded by buying up pipe tobacco.
Roll-your-own brands disappeared overnight, replaced with pipe tobacco brands carrying the same names.
Tobacco companies on their Web sites said they were just trying to find a legal way to stay afloat after being saddled with an enormous tax increase.
This, Cohen said, is why he introduced the bill, which is now in the House Ways and Means Committee.
House Resolution 4439 has not yet been scheduled for a floor vote, and may not be, said Josh Drobnyk, an aide to U.S. Rep. Chris Carney, D-10, of Dimock.
After all, there is only one co-sponsor.
Of the legislation, Carney said: “I am focused on measures that will improve our economy and ease — not increase — the tax burden on our working families during these tough economic times.”
The tax burden is the point of contention, pipe tobacco users said.
If the bill passes, taxes on tobacco — sold both by the gram and by the ounce — would rise to:
- $2.43 per 50 grams
- $2.74 per 2 ounces
- $10.98 per 8 ounces
- $24.78 per 16 ounces
These costs would be in addition to the price pipe smokers pay for those amounts of pipe tobacco. For example, with the average price of a 100-gram tin of McClelland Frog Morton about $13.20, the new price would be $18.06.
Government manipulating us, smokers charge
Buck Reibsame, of Selinsgrove, is steamed about the proposed hikes, as are many of his friends.
“I wouldn’t mind a fair tax, with maybe a 6 to 7 percent hike, but this one, if passed, would be outrageous,” he said Thursday.
“I’ve been smoking for about 40 years and I’ve never seen such an attack on a group of people like this one. If those politicians want to do something to raise revenues, how about cutting back on their perks?”
The government, added long-time smoker Jon McLaughlin, of Selinsgrove, is trying to legislate how he lives through tax manipulation.
“Last year they went after roll-your-own smokers,” said McLaughlin, a smoker for 41 years. “This year, they’re going after anything and everyone. It’s just about raising money. It’s always about money.”
What and who is to benefit from the tax increase? asked Bill Jennings, of Lewisburg.
“Don’t people in Congress have much more important things to worry about? And what could possibly be their justification for a tax amount of $24.78 per pound on something that often doesn’t cost that much to begin with?” he asked, and paused for a second. “Oh yeah, I get it. This tax is intended to make it so only the wealthiest can smoke pipes. Well how about that? Come on legislators. Be serious.”
Jennifer, a worker at a local smoke shop, who asked that her surname not be used, said she switched to pipe tobacco, instead of roll-you-own, and began rolling it into cigarettes. “The price was worth it,” she said. “And taste-wise, I didn’t find much difference.”
Now, she may have no choice but to pay higher prices.
Pipe tobacco is nominally coarser and somewhat moister than most blends of cigarette tobacco. But there are no regulations that say it has to be that way. The federal government says the only difference between the two is how the two tobaccos are labeled.
“The bill punishes pipe smokers and retail tobacconists,” said Jonah Johnstone, a smoker from Selinsgrove. Johnstone thinks this is nothing more than an attempt to rope in more taxes from roll-your-own cigarette tobacco re-labeled as pipe tobacco.
A tax increase of 775 percent on anything is ludicrous, Johnstone said.
“It could conceivably destroy an industry of pipe craftsmen, small farmers, tobacco blenders and retailers.”
A heavy hit for retailers and producers
“If this law passes, it could hurt out business a lot,” said Michelle Longenberger, an employee at Puff Discount, in Sunbury.
Pipe tobacco represents 30 to 40 percent of the shop’s business, Longenberger said.
“We sell everything from small pouches of tobacco, for 94 cents, to larger cans, for $16. Most customers who buy are simply rolling their own cigarettes. It’s what I do. You can roll a fair number for less than $2 total. Of course, that would all change if taxes were raised to the proposed levels.
“I really hope the bill doesn’t pass.”
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You know, I consider myself somewhat liberal, but I have to tell you, nothing would make me happier than lynching these two representatives.