Press Release: IPCPR Comments on White House Budget

March 4, 2014 (Washington, D.C.) — The White House released its annual President’s Budget on March 4, 2014, which serves as the Administration’s starting point when negotiating with Congress as they begin the Appropriations and budgeting debates for FY2015. IPCPR does not expect the proposal to move forward through Congress, but this does demonstrate why we need to remain vigilant on all issues important to the tobacco industry.

The proposal would increase the tax on cigarettes from just under $1.01 per pack to about $1.95 per pack and increase all other excise taxes on tobacco products and cigarette papers and tubes by roughly the same proportion beginning in 2015. Excise tax rates would be increased for inflation annually.

The proposal also includes a one-time floor stocks tax that generally applies to tobacco products, cigarette papers, and tubes that are held for sale beginning on January 1, 2015. Because large cigars are taxed as a percentage of price, rather than per cigar, administering a floor tax on them would be difficult, so large cigars are exempted from the floor tax. No other tobacco products are exempted from the floor tax.

The Administration also proposes to clarify that roll-your-own tobacco includes any processed tobacco that is removed or transferred for delivery to anyone without a proper permit, but does not include export shipments of processed tobacco.

In FY2014, the proposal would have raised $78.091 over ten years. In FY2015, the proposal is estimated to raise $78.217 million over ten years, which would be used to fund pre-Kindergarten education.

Again, IPCPR does not expect this proposal to be approved by the Republican-controlled House of Representatives, but it does demonstrate that the entire suite of tobacco products is going to be on the table when legislators are searching for revenue to fund unrelated programs.