WASHINGTON – On June 6, NACS sent letters to every senator asking them to oppose an increase in the federal excise tax on cigarettes. The association opposes the increase in cigarette taxes because it will likely cause a rise in tax evasion and crime at retail outlets.

“Cigarettes are one of the highest taxed products in the U.S. economy. Federal, state and sometimes local taxes on cigarettes constitute a highly significant portion of the price charged to consumers when they purchase this product. These ever increasing prices have induced many consumers to seek illegal ‘untaxed’ sources for tobacco products,” NACS wrote.

With the cost of a pack of cigarettes jumping dramatically over the last two decades, retailers selling cigarettes have seen an increase in cigarette theft. “Most tobacco retailers exercise strict control over how much cash is available in the event of a robbery. As a result, stealing cigarettes gives the criminals a higher return on their efforts than cash. An increase in the taxes on cigarettes only increases the amount which criminals can realize on the cigarettes they steal and thereby enhances the attractiveness of tobacco retailers as victims of robbery,” NACS wrote.

Both the House and Senate are considering an increase in the federal excise tax on cigarettes to provide revenue for the State Children’s Health Insurance Program (SCHIP), which needs reauthorization. In the House, the Energy and Commerce Committee will likely take up a SCHIP reauthorization measure in July, while the Ways and Means Committee will look at ways to fund the program, said Rep. Diana DeGette, (D-CO) in Congress Daily.

A cigarette tax hike will probably be one of the primary offsets in the House SCHIP package, and a Senate version taps a 61-cent per pack cigarette tax, which Sen. Gordon Smith (R-OR) says will generate $35 billion. A federal cigarette tax increase is the least controversial method of raising revenue for SCHIP funding, both Senate and House members say.

However, advocate groups want the Senate’s 61-cent cigarette tax to jump to $1, saying that a substantial increase in cigarette prices can dramatically drop the rate at which teenagers start smoking, the newspaper reports.