Give Me A Break!

Many of you have read about the proposed legislation by Congress to increase the tax on an individual hand made cigar from 5 cents a stick to $10.00 per stick.  As most of you know; this tax failed to be passed into law by a narrow margin.   Here are a few facts that you may not know:

  • Never in the history of the United States has a tax been passed at an increase of 20,000 percent
  • In 2006, there were 5.3 billion cigar sold nationally, compared to 400 billion cigarettes
  • In the State of Texas, the American Cancer Society was one of the largest supporters of an excise tax on cigars in the State, but they received no proceeds from the tax in 2007
  • The federal excise tax on cigars is part of an effort to raise an additional $40-50 billion in revenue to support the Children’s Health Insurance Programs (CHIP) at the State level.

Let me be clear on my stance on the excise tax on cigars.   I think it is fair to tax cigars at a reasonable rate to raise money for good causes, such as insurance for children.   In addition to taxing cigars, Government should continue sin taxes on alcohol, gambling and strip clubs as well.   Again, if it supports a worthwhile cause, I am for it.    However, an increase like the one proposed by many legislators this past year is just flat-out ludicrous.

With the excise tax on tobacco in place, another question comes to mind.  Who decides what is a “sin” or a behavior that is destructive and when its not?   For example, why do we not have a tax on Burger King or McDonald’s value meals?   There are many more fat children and adults in this country than there are cigar smokers.   The obesity epidemic in America is out of control and it contributes roughly 25 percent of the lifestyle related health care cost in our health care system.  Cigar smoking and the damage it does to an adult’s health pales in comparison to the cost and damage done to someone that lives a lifetime of obesity.   

When will the Congress pass a tax to value size a meal?    If you add 20 cents to every hamburger ordered, at every McDonald’s in the country, we would have your CHIP program paid for in 6 months.    Let’s be logical here, leave that cigar tax at a reasonable level and let adults continue to enjoy one of the fine pleasures in life.

By Jeff Bernhard May 2008