Tobacco Industry Fights Tax Hike

Source from:  Rocky Mount Telegram 02/09/2009

A bill passed by Congress and signed Wednesday by President Barack Obama is expected to extend health coverage to 4 million uninsured children, a decision praised by health advocates. But the tobacco industry is pushing against the law, which relies on massive tax increases on cigarettes and other tobacco products to fund more than $30 billion in spending. The legislation, passed twice by Congress last year before being vetoed by President George W. Bush, expands the State Children's Health Insurance Program, which prior to this week covered about 7 million children nationwide. "Without question, people in North Carolina are hurting," U.S. Rep. G.K. Butterfield, D-1st District, said, speaking in support of the bill during a U.S. House debate. "When people lose their jobs, they often lose access to affordable health care, and it is the children who suffer most in these unfortunate circumstances." But some say the expanded program places a disproportionate burden on North Carolina and the Twin Counties, where tobacco production remains an economic staple. The law pays for expanded children's health care by raising the federal tax on a pack of cigarettes from 39 cents to $1 - a jump of about 150 percent. "I think it's unfair to put all of this on tobacco," said Greg Bunn, a Nashville farmer who grows about 90 acres of tobacco a year. "It certainly could be distributed better." Frustration was evident in Bunn's voice as he talked about state and federal tobacco taxes, which have skyrocketed in recent decades as lawmakers again and again have tapped the product to pay for various government programs. "It's an easy target for them, I guess, but that doesn't make it right," Bunn said. "This is my livelihood." Nash County is the fifth-largest producer of flue-cured tobacco in North Carolina, the nation's No. 1 tobacco-producing state, Nash County Extension Director Charlie Tyson said. According to economists, targeted tax increases have impacted sales in the past, and experts say the forthcoming increase in tobacco prices could cost the state 3,000 jobs and $36 million in revenues. U.S. Sen. Kay Hagan, D-N.C., voted with the Democratic majority in approving the SCHIP expansion, but not before pushing an amendment that would have spread the cost to other products such as sodas and sweets. The amendment didn't gain traction, though. "Ultimately, I have to vote on behalf of the 10 million low-income and disadvantaged children this bill helps," Hagan said on the U.S. Senate floor, despite her reservations about the bill's impact on tobacco. North Carolina's other senator, Republican Richard Burr, voted against the bill. Butterfield and former tobacco farmer U.S. Rep. Bob Etheridge, D-2nd District, joined a 290-135 majority in the U.S. House in passing the bill. Forty Republicans voted in approval, but N.C. Rep. Walter B. Jones, R-3rd District, voted against it. Although children's advocates throughout the state rejoiced the advancement in providing health care for underprivileged children, Bunn and other local tobacco farmers like Sammy Tant wish more legislators would have joined Jones and Burr. "It's kind of speaking out of both sides of mouth," Bunn said. "They want tax money, but if they continue to increase taxes on the same product, the money is going to dry up. It's kind of like, when are you going to kill the goose that laid the golden egg?" Enditem