Recently, the American public got a true taste of American politics. Through a series of town hall meetings held across America, our "Representatives" spoke to us about the proposed government-run health care program. The one thing that we learned out of the circus which ensued resonated both loudly and clearly. These people not only do not represent us, they think they are smarter than us, and think they know more about what is good for us and what we want than we do. Today's article documents just how smart they really are.
WASHINGTON (AP) - With a simple marketing twist, tobacco companies are avoiding hundreds of millions of dollars a year in taxes by exploiting a loophole in President Barack Obama's child health law.Obama and Congress increased taxes on tobacco products earlier this year to pay for expanded children's health insurance, but tobacco for roll-your-own cigarettes saw a disproportionate leap, from $1.10 to $24.78 per pound. Some predicted the tax would kill the roll-your-own industry, which had offered a cheaper alternative to packaged cigarettes.
But tobacco companies quickly adapted. The Associated Press found that as soon as the tax was on the books, companies all but shut down their roll-your-own brands and reinvented them under a less-restricted, less-taxed category: pipe tobacco. It's still destined to be rolled and smoked, but it's taxed at barely a tenth the rate, $2.83 per pound.
In their general hasty, ineffectual way, Congress passed a bill which was then signed by our equally adept President, that placed a huge tax increase on roll-your-own tobacco. As usual, they didn't take the time to weigh the consequences of the bill. No doubt, they didn't even read it before they passed it, as is the common practice with the present Congress. The roll-your-own manufacturers were then able to find a loophole (the size of the Mexican/American border) which allowed them to completely bypass the imposed tax.
Normally, pipe tobacco is coarser and moister than cigarette tobacco. But nothing says it has to be. In fact, the federal government says the only distinction between the two is how it's labeled. That effectively gives tobacco marketing executives an opportunity to shape the company's tax rate.Now, Congress will spend millions of tax dollars to correct the bill, which should have never been passed in the first place. Why is the U.S. Government passing a bill to raise taxes on tobacco to discourage young people from smoking? Isn't that why there's an age limit on tobacco? If making it illegal to buy tobacco before a certain age or telling them no isn't going to discourage them, imposing a gigantic tax increase isn't going to work either. The only thing the tax increase is going to do, is put the manufacturers out of business, which then in turn will decrease consumption of tobacco marginally. The government does not have the right to tax someone into bankruptcy. If that isn't tyranny, I don't know what is."They tried to make a product within the elements of the law that they could, in fact, market as pipe tobacco," said Scott Bendett, owner of Habana Premium Cigar Shoppe in Albany, N.Y., which advertises the new pipe tobacco for hand-rolled cigarettes.
Tobacco companies say they're just trying to find a legal way to stay afloat after being saddled with an enormous tax increase. But both the Obama administration and some in Congress say they'll try to come up with a distinction between the tobacco types, closing a loophole that could cost taxpayers hundreds of millions of dollars year.
"If the companies won't do what is right, then we will," said Sen. Frank Lautenberg, D-N.J., a reliably anti-tobacco voice in Congress.
Tax? What tax?When will they learn? Making something illegal is not going to stop people from getting it. Making something more expensive is not going to detour people. How smart are these people if they can't even learn from our own history?
Prohibition did not stop the selling and consuming of alcohol. All Prohibition did was hurt honest, hard-working businessmen who had spent years perfecting their fine wines and spirits and growing their businesses, and make psychopathic criminals (Al Capone anyone?) rich and powerful.
We could even mention that which shall not be mentioned--Vietnam. That country has been at war for centuries, with one country after another trying to take control for the vast drug wealth it holds. We didn't learn our lesson there either, because now we're in the same situation in Afghanistan. Those poppies are just for decoration and our banana muffins. Honest.
Yet drug use has never waned or dwindled, even after a quote "War on Drugs". If people want it, they're going to get it. It doesn't matter how illegal it is, what the penalty is, or how much it costs. It's not going to stop anymore than prostitution.
On the day the Earth finally crashes into the Sun, somebody somewhere will be snorting cocaine off a Prostitute's ass, while a midget with a camera smokes a cigar and drinks a martini in the corner.
What Bill Clinton started by going after Big Tobacco, has now come around full circle like a roundhouse kick to the face. The would-be demons who market and sell death to the little kiddies, are now the heroes. They're now the ones standing up for our freedoms. The ones fighting the good fight. The devils in our closets who sell candy-flavored deathsticks to the underaged are now the company who cares about their customers, who found a way for their customers to get what they want, and who made sure their customers didn't have to pay more for it.
And the brilliant minds who were going to tax them right out of business, have now made them more successful than ever. They've sold record numbers, which never would have happened before, and by the time Congress can procure enough spackle to cover the "loophole", they'll have enough time and money to fight their way around it again.
It looks like Congress took a cue from Rhode Island when they bungled a bill which opened a loophole for legal prostitution, and these are the same people we are supposed to trust to make a health care bill. I'm pretty sure this is a blinking neon sign in our faces telling all of us that's a bad idea.Kevin Altman, who represents a handful of small companies with the Council of Independent Tobacco Manufacturers of America, acknowledged that some companies were exploiting the loophole, packaging cigarette tobacco and marketing it as pipe tobacco.
"What are you going to do? You're trying to save the company," Altman said. "And what they're doing ... , as far as I can tell, is within the limits of the law."
Still, Altman said his companies want the government to make the definition clearer. The ambiguity hurts those companies that didn't make the marketing switch and must sell their tobacco at higher prices.
"Many times our government passes things without first taking an extra few days to say, 'What are the unintended consequences?'" Altman said. "That's what happened here."
