Tobacco users unfairly bear the burden of supporting expansion of this program!
In case you’ve been living under a rock lately, you’ve probably heard that this unfair taxation act has passed. The Children’s Health Insurance Program Reauthorization Act of 2009 (Public Law 111-3) that was signed into law by President Obama on February 4, 2009.
You can find a summary from the TTB.Gov site at http://ipcpr.org/legislation.html. While they haven’t yet published the required rulemaking documents about the implementation of the provisions of this Act.
The Act increases the Federal excise tax on all tobacco products and cigarette papers and cigarette tubes, effective April 1, 2009. In addition, the Act imposes a floor stocks tax on all tobacco products (except large cigars), cigarette papers and cigarette tubes held for sale on April 1, 2009. A floor stocks tax is a one-time excise tax placed on a commodity undergoing a tax increase. The amount of the floor stocks tax is equal to the difference between the new tax rate and the one just previous to it. Any person who holds tobacco products (except large cigars), cigarette papers, or cigarette tubes is liable for the floor stocks tax on April 1, 2009.
Here is their graph of how the taxes, and the anticipated floor tax, will break down:
| Tobacco Product | Tax Rate effective March 31, 2009 | Tax Rate effective
April 1, 2009 | Floor Stocks Tax Rate (difference between
the rates) | | Small Cigarettes - Class A (Weigh 3 lbs. or less per 1,000) | $19.50 per 1,000 equivalent to:
$3.90 per carton $0.39 per pack | $50.33 per 1,000 equivalent to:
$10.066 per carton $1.0066 per pack | $30.83 per 1,000 equivalent to:
$6.166 per carton $0.6166 per pack | | Large Cigarettes - Class B (Weigh more than 3 lbs. per 1,000) | Up to and including 6½” long: $40.95 per 1,000 | Up to and including 6½” long: $105.69 per 1,000 | $64.74 per 1,000 | | Over 6½ “ long: Each 2¾” counts as 1 paper, then $19.50 per 1,000 | Over 6 ½ “ long: Each 2¾” counts as 1 paper, then $105.69 per 1,000 | Over 6½” long: $64.74 per 1,000 | | Small Cigars (Weigh 3 lbs. or less per 1,000) | $1.828 per 1,000 | $50.33 per 1,000 | $48.502 per 1,000 | | Large Cigars (Weigh more than 3 lbs. per 1,000) | 20.719% of sales price but not to exceed $48.75 per 1,000 | 52.75% of sales price but not to exceed $0.4026 cents per cigar (or $402.60 per 1,000) | NOT PART OF FLOOR STOCKS TAX | | Chewing Tobacco* | $0.195 per pound | $0.5033 per pound | $0.3083 per pound | | Snuff* | $0.585 per pound | $1.51 per pound | $0.925 per pound | | Pipe tobacco* | $1.0969 per pound | $2.8311 per pound | $1.7342 per pound | | Roll-your-own tobacco* | $1.0969 per pound | $24.78 per pound | $23.6831 per pound | | Cigarette paper | Up to and including 6 ½” long: $0.0122 per 50 | Up to and including 6½” long: $0.0315 per 50 | $0.0193 per 50 | | Over 6 1/2“ long: Each 2 ¾” counts as 1 paper, then $0.0122 per 50 | Over 61/2“ long: Each 2 ¾” counts as 1 paper, then $0.0315 per 50 | Over 6½” long: $0.0193 per 50 | | Cigarette tubes | Up to and including 6½” long: $0.0244 per 50 | Up to and including 6½” long: $0.0630 per 50 | $0.0386 per 50 | | Over 6½ “ long: Each 2¾” counts as 1 tube, then $0.0244 per 50 | Over 6½ “ long: Each 2¾” counts as 1 tube, then $0.0630 per 50 | Over 6½” long: $0.0386 per 50 | | |
Wise smokers of cigars and pipe tobacco will want to contact their local tobacconist before April 1, 2009 in order to stock up on their supplies before the taxes take effect. Not only will they be saving money, but hopefully help their struggling local tobacconist out by reducing their floor tax exposure on items that aren’t considered Large Cigars.