WASHINGTON - Last week U.S. Senators Dick Durbin (D-IL), Frank Lautenberg (D-NJ) and Richard Blumenthal (D-CT) introduced the Tobacco Tax Equity Act, which seeks to close loopholes in the tax code that allow tobacco companies to avoid the federal cigarette and roll-your-own (RYO) tobacco tax.
"The current loopholes in the taxes on tobacco products encourage the use of products like pipe tobacco, smokeless tobacco, and 'nicotine candies€™ as a cheap source of tobacco, particularly among young people. This difference in tax rates doesn€™t make sense, and we are already seeing tobacco manufacturers abusing them by changing the labels on their products to avoid paying the higher tax. This bill will stop tobacco manufacturers from gaming the system and protect more children and teens from this dangerous habit," Durbin said in a statement.
"These loopholes are another egregious example of tobacco companies putting the bottom dollar over public health the well being of our children," added Lautenberg. "This legislation will stop big tobacco from exploiting loopholes that cheat the government out of tax dollars. If companies won€™t do what is right, then we will by working to pass this bill and close the loopholes."
"Incredibly, the tobacco industry continues to seek profits by addicting children and avoiding taxes," said Blumenthal, adding, "This bill equalizes the federal tax rate for all tobacco products to that of cigarettes. It will generate more than a billion dollars in revenue, and help prevent young people from beginning a deadly addiction."
The senators say that the Tobacco Tax Equity Act would create "tax parity" by establishing the tax rate on all tobacco products at the same per unit level as cigarettes. Under current law, small cigars and RYO tobacco products are taxed at the same level as cigarettes; however, cigars, smokeless tobacco and pipe tobacco are taxed at a lower rate.