Proposed Tobacco Tax Bill S.1403 Introduced 7/21/2011

Unfair Tobacco and Tobacco Related Items Tax

Sneaky, sneaky, sneaky!! What our government won't do for the all mighty dollar. On July 21, 2011 Sen. Tom Harkin of Iowa introduced a new proposed tobacco tax bill s.1403. The latest title of the bill is IDEA Full Funding Account. While I don't disagree with providing programs to assist in special education and related services to children with disabilities, I do have a problem with them trying to sneak a new tobacco tax in under the same bill.

This is a summary of what is on the bill:

IDEA Full Funding Act - Amends the Individuals with Disabilities Education Act (IDEA) to reauthorize and make appropriations through FY2021 for the grant program to assist states and outlying areas in providing special education and related services to children with disabilities.

Saving Lives by Lowering Tobacco Use Act - Amends the Internal Revenue Code to increase excise taxes on cigars, cigarettes, pipe tobacco, roll-your-own tobacco, snuff, and chewing tobacco.

Imposes an excise tax on smokeless tobacco sold in discrete single-use units.

Taxes other tobacco products at a level of tax equivalent to the tax rate for cigarettes on an estimated per use basis.

Provides for annual inflation adjustments to excise taxes on tobacco products and cigarette papers and tubes.

Can you believe that last sentence annual inflation adjustments. Do you get an annual inflation adjustment on your income?

This is a copy of what changes Sen. Tom Harkin would like to see. Oh by the way he has 14 other senators as supporters!


A BILL

To amend part B of the Individuals with Disabilities Education Act to provide full Federal funding of such part.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

SEC. 2. AMENDMENTS TO IDEA.

SEC. 3. TOBACCO TAX INCREASE AND PARITY.

(a) Short Title- This section may be cited as the ‘Saving Lives by Lowering Tobacco Use Act’.

(b) Increase in Excise Tax on Small Cigars and Cigarettes-

(1) SMALL CIGARS- Section 5701(a)(1) of the Internal Revenue Code of 1986 is amended by striking ‘$50.33’ and inserting ‘$100.50’.

(2) CIGARETTES- Section 5701(b) of such Code is amended--

(A) by striking ‘$50.33’ in paragraph (1) and inserting ‘$100.50’, and

(B) by striking ‘$105.69’ in paragraph (2) and inserting ‘$211.04’.

(c) Tax Parity for Pipe Tobacco and Roll-Your-Own Tobacco-

(1) PIPE TOBACCO- Section 5701(f) of the Internal Revenue Code of 1986 is amended by striking ‘$2.8311 cents’ and inserting ‘$49.55’.

(2) ROLL-YOUR-OWN TOBACCO- Section 5701(g) of such Code is amended by striking ‘$24.78’ and inserting ‘$49.55’.

(d) Clarification of Definition of Small Cigars- Paragraphs (1) and (2) of section 5701(a) of the Internal Revenue Code of 1986 are each amended by striking ‘three pounds per thousand’ and inserting ‘four and one-half pounds per thousand’.

(e) Clarification of Definition of Cigarette- Paragraph (2) of section 5702(b) of the Internal Revenue Code of 1986 is amended by inserting before the final period the following: ‘, which includes any roll for smoking containing tobacco that weighs no more than four and a half pounds per thousand, unless it is wrapped in whole tobacco leaf and does not have a cellulose acetate or other cigarette-style filter’.

(f) Tax Parity for Smokeless Tobacco-

(1) IN GENERAL- Section 5701(e) of the Internal Revenue Code of 1986 is amended--

(A) in paragraph (1), by striking ‘$1.51’ and inserting ‘$26.79’;

(B) in paragraph (2), by striking ‘50.33 cents’ and inserting ‘$10.72’; and

(C) by adding at the end the following:

‘(3) SMOKELESS TOBACCO SOLD IN DISCRETE SINGLE-USE UNITS- On discrete single-use units, $100.50 per each 1,000 single-use units.’.

(2) DISCRETE SINGLE-USE UNIT- Section 5702(m) of such Code is amended--

(A) in paragraph (1), by striking ‘or chewing tobacco’ and inserting ‘chewing tobacco, discrete single-use unit’;

(B) in paragraphs (2) and (3), by inserting ‘that is not a discrete single-use unit’ before the period in each such paragraph; and

(C) by adding at the end the following:

‘(4) DISCRETE SINGLE-USE UNIT- The term ‘discrete single-use unit’ means any product containing tobacco that--

‘(A) is intended or expected to be consumed without being combusted; and

‘(B) is in the form of a lozenge, tablet, pill, pouch, dissolvable strip, or other discrete single-use or single-dose unit.’.

(3) OTHER TOBACCO PRODUCTS- Section 5701 of such Code is amended by adding at the end the following new subsection:

‘(i) Other Tobacco Products- Any product not otherwise described under this section that has been determined to be a tobacco product by the Food and Drug Administration through its authorities under the Family Smoking Prevention and Control Act shall be taxed at a level of tax equivalent to the tax rate for cigarettes on an estimated per use basis as determined by the Secretary.’.

(g) Clarifying Other Tobacco Tax Definitions-

(1) TOBACCO PRODUCT DEFINITION- Section 5702(c) of the Internal Revenue Code of 1986 is amended by inserting before the period the following: ‘, and any other product containing tobacco that is intended or expected to be consumed’.

(2) CIGARETTE PAPER DEFINITION- Section 5702(e) of such Code is amended by striking ‘except tobacco,’ and inserting ‘or cigar (other than roll-your-own tobacco)’.

(3) CIGARETTE TUBE DEFINITION- Section 5702(f) of such Code is amended by inserting before the period ‘or cigars’.

(4) IMPORTER DEFINITION- Section 5702(k) of such Code is amended by inserting ‘or any other tobacco product’ after ‘cigars or cigarettes’.

(h) Inflation Adjustment- Section 5701 of the Internal Revenue Code of 1986, as amended by subsection (f)(3), is amended by adding at the end the following new subsection:

‘(j) Inflation Adjustment- In the case of any calendar year after 2013, each amount set forth in this section shall be increased by an amount equal to--

‘(1) such amount, multiplied by

‘(2) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘calendar year 2012’ for ‘calendar year 1992’ in subparagraph (B) thereof.’.

(i) Floor Stocks Taxes-

(1) IMPOSITION OF TAX- On tobacco products manufactured in or imported into the United States which are removed before any tax increase date and held on such date for sale by any person, there is hereby imposed a tax in an amount equal to the excess of--

(A) the tax which would be imposed under section 5701 of the Internal Revenue Code of 1986 on the article if the article had been removed on such date, over

(B) the prior tax (if any) imposed under section 5701 of such Code on such article.

(2) CREDIT AGAINST TAX- Each person shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to $500. Such credit shall not exceed the amount of taxes imposed by paragraph (1) on such date for which such person is liable.

(3) LIABILITY FOR TAX AND METHOD OF PAYMENT-

(A) LIABILITY FOR TAX- A person holding tobacco products on any tax increase date to which any tax imposed by paragraph (1) applies shall be liable for such tax.

(B) METHOD OF PAYMENT- The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.

(C) TIME FOR PAYMENT- The tax imposed by paragraph (1) shall be paid on or before the date that is 120 days after the effective date of the tax rate increase.

(4) ARTICLES IN FOREIGN TRADE ZONES- Notwithstanding the Act of June 18, 1934 (commonly known as the Foreign Trade Zone Act, 48 Stat. 998, 19 U.S.C. 81a et seq.), or any other provision of law, any article which is located in a foreign trade zone on any tax increase date shall be subject to the tax imposed by paragraph (1) if--

(A) internal revenue taxes have been determined, or customs duties liquidated, with respect to such article before such date pursuant to a request made under the 1st proviso of section 3(a) of such Act, or

(B) such article is held on such date under the supervision of an officer of the United States Customs and Border Protection of the Department of Homeland Security pursuant to the 2d proviso of such section 3(a).

(5) DEFINITIONS- For purposes of this subsection--

(A) IN GENERAL- Any term used in this subsection which is also used in section 5702 of such Code shall have the same meaning as such term has in such section.

(B) TAX INCREASE DATE- The term ‘tax increase date’ means the effective date of any increase in any tobacco product excise tax rate pursuant to the amendments made by this section (other than subsection (g) thereof).

(C) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury or the Secretary’s delegate.

(6) CONTROLLED GROUPS- Rules similar to the rules of section 5061(e)(3) of such Code shall apply for purposes of this subsection.

(7) OTHER LAWS APPLICABLE- All provisions of law, including penalties, applicable with respect to the taxes imposed by section 5701 of such Code shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1), to the same extent as if such taxes were imposed by such section 5701. The Secretary may treat any person who bore the ultimate burden of the tax imposed by paragraph (1) as the person to whom a credit or refund under such provisions may be allowed or made.

(j) Effective Date- The amendments made by this section shall apply to articles removed (as defined in section 5702(j) of the Internal Revenue Code of 1986) after December 31, 2011.





After doing a little research I discovered they are trying to double the tax rate on tobacco and tobacco related products.

Example

The tax on cigarettes would go from $50.33 to $100.50

The tax on RYO (roll your own) Tobacco $24.78 to $49.55

The tax on Pipe tobacco from $2.83 to 49.55

Of course this is per pound. Now my research shows that it takes approximately 8oz. of tobacco to make a carton of cigarettes. That's 1/2 a pound so the tax would be what $50.25 on a carton of cigarettes or am I completely confused? I also read that in the 60's it took 2.5 lbs of tobacco to make 1000 sticks of cigarettes. Today it only takes .9 lbs to make that same 1000 sticks. So what else are they mixing with the tobacco?

Look at the increase on pipe tobacco (OMG) who are they kidding? Research also shows me that pipe tobacco is not treated with the chemicals that big tobacco treats your cigarettes with like formaldehyde, ammonium, and cyanide to name a few. So a lot of folks that chose to smoke switched to using pipe tobacco to roll their own cigarettes. We know smoking is bad but this would be the lessor of the two evils considering the chemicals.

If I'm not mistaken, tobacco is already the highest taxed item/items/product in our country. How long is WE THE PEOPLE going to be able to handle all the increases, and its not just the taxes. Look at fuel, food, clothing, everything. Unemployment is not going away. Wages are not getting any higher. But the price of everything sure is!! I urge and you should urge all your friends and family to visit www.popvox.com/bills/us/112/s1403/report#nation


vote your opinion for or against comment tell them how you feel and they will send what you have to say to your local representatives. Or you can wright and old fashion letter and voice your opinion. Get your voice heard. They have got to stop or be stopped they are suppose to work for us.

Think for just a moment, if this tax were to go through- How many retailers will be put out of business, how many distributors or manufacturers, or even tobacco growers will be finished. Can we as an economy, as a nation, as a nation that is suppose to have the freedom of choice can we handle more. Or (and I know this is far fetched) if every tobacco user stopped what would that do to the economy? How many more people in the unemployment line? Better yet if we all stopped tobacco usage, Where the heck would the government get the money from, fuel, food, or how about directly from your pay check?

PLEASE EVERY AMERICAN THAT THIS WOULD EFFECT (AND MAYBE THATS ALL OF US) NEEDS TO BE HEARD. SPEAK UP THROUGH THE POWER OF THE PEN AND/OR THE INTERNET.

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Comments 3 comments

poetvix profile image

poetvix 5 years ago from Gone from Texas but still in the south. Surrounded by God's country.

Thanks for the information. This is the first I have heard of this. I wonder how they plan to fund IDEA when all the smokers quit because they can't afford the new hikes.


mod2vint profile image

mod2vint 5 years ago from Sunny Florida Author

Hi poetvix, I think thats part of it, they say they want tobacco users to quit, but think about what would happen if tobacco users did quit all the jobs lost. Its just a greed thing. The only thing to do in my opinion is pass the fair tax then everyone pays the same based on what they consume. https://www.popvox.com/bills/us/112/s1403/report#n...


Hii 5 years ago

Your math is actually incorrect. The tax would go from 1.006 dollars to 2.01 dollars per pack.

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