Wednesday, April 10, 2013

Obama Proposes Federal Tax Increase on Tobacco


Greetings freedom fighters. We just received an email from IPCPR that informs us that Obama has called for an increase in Federal taxes on all tobacco. Read the details of the email below.

Until the next post, siempre fumando,
Habana Port

Thanks to Thomas Briant and our counterparts at NATO for the following:

Obama Budget Proposes $.94 Per Pack Federal Cigarette Tax Increase and Proportionate Increase in All OTP Tax Rates

Today, President Obama delivered to Congress his administration’s proposed budget that includes a $.94 per pack increase in the federal cigarette tax rate and an increase in all other tobacco tax rates by a similar proportion. This means that the Obama Administration’s proposal would raise the federal cigarette tax to $1.95 per pack (a 93% increase in the cigarette tax) and a similar proportionate increase in the tax rates on cigars, pipe tobacco, roll-your-own tobacco and smokeless tobacco products. If enacted into law by Congress, these cigarette and tobacco tax increases would go into effect on January 1, 2014.

These proposed cigarette and tobacco tax increases are estimated to raise $78 billion over the next ten years to fund the President’s initiative to extend preschool education to all four year olds from families with low to moderate incomes.

Below is the language from President Obama’s 2014 Budget Submission to Congress that summarizes the proposed cigarette and tobacco tax increases. The actual proposed tax rates are not referenced in the summary. NATO will update members as soon as the proposed tax rates on other tobacco products are announced by the Administration.

Increase tobacco taxes and index for inflation

Under current law, cigarettes are taxed at a rate of $50.33 per 1,000 cigarettes. This is equivalent to just under $1.01 per pack, or approximately $22.88 per pound of tobacco. Taxes on other tobacco products range from $0.5033 per pound for chewing tobacco to $24.78 per pound of roll your-own tobacco.

The Administration proposes to increase the tax on cigarettes to $97.65 per 1,000 cigarettes, or about $1.95 per pack, increase all other tobacco taxes by about the same proportion, and index the taxes for inflation after 2014. The Administration also proposes to clarify that roll-your-own tobacco includes any processed tobacco that is removed for delivery to anyone other than a manufacturer of tobacco products or exporter. The rate increases would be effective for articles held for sale or removed after December 31, 2013.

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