NATO - reauthorize SCHIP without imposing tax increases on tobacco products..

January 22, 2009 - The U.S. Senate plans to vote on the 2009 legislation to expand the State Children's Health Insurance Program (SCHIP) as early as Friday, 1/23/2009 or by early next week, according to the most recent issue of NATO E-News from the National Association of Tobacco Outlets.

NATO supports the reauthorization and/or expansion of the SCHIP. What NATO opposes is the substantially raising the federal excise tax on tobacco porducts to fund the expansion. The economic impact on the entire tobacco industry will be disastrous.

First, a 156% tax rate increase on cigarettes compounded by tax rate increases of up to 6,000% on large cigars, 2,197% on little cigars, 710% on roll-your-own tobacco, 156% on smokeless tobacco and 156% on pipe tobacco will lead to declines of 10% or more in retail sales of tobacco. This large reduction in sales will have a corresponding impact on industry jobs. According to 2002 U. S. Census Bureau statistics, 1.17 million union and non-union employees are employed by tobacco manufacturers, wholesalers and retailers. With upward of a 10% decline in tobacco sales, industry estimates project up to 117,000 jobs will be lost. Tax increase on tobacco products.

Second, the SCHIP tax increases will significantly raise the value of tobacco products held in inventory. The unintended consequence will make warehouses, delivery trucks and retail stores more likely targets for crime.

Third, the escalation of taxes on tobacco products will lead to a corresponding rise in purchases of tobacco products by consumers over the Internet and on the black market, where vendors illegally sell tobacco products tax-free and do not verify a customer's age to avoid selling to minors.

Finally, because most Americans who buy tobacco are in the low or middle- income range, raising tobacco taxes will affect the poor more disproportionately.

A free website hosted by Altria Client Services and Philip Morris USA,, www.stoptheFETincrease.com, provides a simple, fill-in-the-blank form to allow retailers to voice their displeasure with the bill. Retailers can also call a hotline at (866) 527-4494 to reach out to their legislators.

Reference: SCHIP Will Lead to Layoffs
Tax hike to pay for bill will lead to sales reductions, layoffs, store closings, more, Convenience Store / Petroleum (CSP) Daily News, 1/22/2009.

Archive of Supporting Documentation: U.S. Senate Committee Votes to Expand SCHIP..; SCHIP Expansion approved by U.S. House of Representatives..; U.S. Congress gets ready to pass expansion of SCHIP..;
SCHIP expansion legislation time to try again..;
Congressional Democrats have scrapped plans for another vote on expansion of the SCHIP..
AWMA urges grassroots effort to defeat FDA tobacco regulation and SCHIP..
U.S. Federal tax increase on tobacco - try it again..
U.S. House fails to override SCHIP expansion veto..
Congress Sends An Extension of the SCHIP to President Bush..
Bush vetoes 2nd bill expanding the State Children's Health Insurance Program (SCHIP)...
Revised State Children's Health Insurance (S-CHIP) Bill..
Bush's SCHIP veto stands..
U.S. CONGRESS PASSES CHILDREN'S COVERAGE..
US edges closer to federal tax hike on tobacco products...
Lawmakers in Washington are working to reauthorize the State Children's Health Insurance Program (SCHIP) before it expires on September 30, 2007...