Cigar Tax Awaits Presidential Veto

The proposed massive increase in the federal excise tax on cigars, which is part of the Children's Health Insurance Program Reauthorization Act of 2007, was approved by both the U.S. House and Senate this week, and the legislation will soon go to the President, who has threatened to veto the bill. The SCHIP program expires on September 30, so a temporary extension of the current program is expected, since the House does not have enough votes to override a Presidential veto. As it affects cigars, the new tax rate (if adopted) would be approximately 53% on the price of each cigar, with a maximum/cap of $3 per cigar (current cap is $0.05 per cigar). As it relates to the cigar tax, the House has basically agreed to the Senate's version, a tax rate of 52.988% vs 53.13%, with a cap of $3 per cigar. Stay tuned for more on this vital issue, which is of utmost importance to all U.S. cigar smokers, as well as everyone in the cigar industry.

UPDATE: On September 29, President Bush approved emergency legislation to fund the Federal Government for the next seven weeks, which will also keep the SCHIP program running while Congress tries to “work out a more responsible approach”. According to the President, the proposed plan put forward by Congress is irresponsible, and would dramatically expand the SCHIP program beyond its original intent. Read the full text from the President's weekly radio address.