This is one that is near and dear to my cigar-loving heart. Bush had vetoed this bill twice before that would have expanded the State Children's Health Insurance Program (SCHIP) to include more children. It would have been funded by more tobacco taxes. Specifically, it would have increased the federal excise tax on large cigars to 53 percent of the manufacturer's selling price with a cap of $3 per cigar. The current tax is 20.7 percent with a five cent cap. Under the Democrats bill veoted by Bush earlier this month, a $10 cigar with a five cent excise tax would increase to $13. For a box of 20 cigars, that would be a $60 increase just in taxes! It would have put many cigar stores out of business and maybe even a few cigar manufacturers. Thankfully, the bill that was signed by Bush today only extends the current program to 2009. There will be no expansion of the program and no tobacco taxes.
Now, the program itself is just another welfare program and should be abolished but it specifically addresses children and we all know how nearly any program involving children, or the word "children" is virtually guaranteed. My question has always been, if you tax tobacco to pay for health programs and people reduce their tobacco consumption, where will you get the money to pay for the program? Another tax? No. Just call Mr. Bernanke and have him fire up his helicopter.