Governor Beshear opposes tobacco tax increase in $ 3.5 billion reconciliation bill
LOUISVILLE, Ky. – Kentucky Gov. Andy Beshear last week told President Joe Biden that he opposed sharp increases in federal excise taxes on tobacco products included in a bill to major spending, claiming they would “devastate” farmers in his state.
The $ 3.5 trillion spending bill with much of President Job Biden’s political platform for his first term on Saturday cleared the House Budget Committee, chaired by Representative John Yarmuth of Louisville.
If passed by the House, the bill to fund universal preschool, daycare, free community colleges, paid family time off, climate change initiatives and more could then be passed by the Senate. with a majority vote through the reconciliation process, thus avoiding a Republican-led obstruction.
In addition to tax increases for individuals and corporations in the top rate, the reconciliation bill generates billions of dollars in offsetting revenue, including significant increases in federal excise taxes on tobacco products – doubling the rate on cigarettes and cigars; and increasing taxes on chewing tobacco products more than 17 times.
The reconciliation bill would increase the federal excise tax on a packet of cigarettes from $ 1.01 to $ 2.02, while increasing the tax on a pound of chewing tobacco from 50 cents per pound to 10.70 $, or 21 times more.
The rate of excise tax on a pound of “single-use” chewing tobacco would be multiplied by 17, from $ 1.51 to $ 26.84.
Federal tax increases on tobacco and vaping products provided for in legislation are estimated to generate approximately $ 100 billion in revenue.
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Beshear’s letter to Biden, obtained by The Courier Journal, was dated last Wednesday and expressed “concern” that proposed tobacco tax hikes “are harming Kentucky farmers and businesses almost exclusively. “.
“From the information I have seen, tobacco growers and businesses in Kentucky stand to lose approximately $ 51 million in lost revenue under the proposal,” Beshear wrote. “The estimated total negative economic impact in the Commonwealth could reach $ 65 million, including 295 fewer jobs, 11.6 million lost wages and $ 28.8 million less state and local revenues.”
The governor added that the tax hike “unfairly targets black tobacco growers in Kentucky – one of only two places in the world where it is made – endangering hundreds of well-paying union jobs in our communities.”
“Kentucky’s agricultural sector will bear a costly and disproportionate burden under the current tobacco excise tax proposal in Congress. A disruption of this magnitude could create an adverse ripple effect throughout the agricultural supply chain and devastate an industry already hard hit over the years.
The International Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGW) – which represents more than 700 workers producing chewing tobacco, snuff and nicotine sachets at the Swedish factory Match in Owensboro – Also pushed Congress to remove tobacco tax hikes from the bigger bill.
Letters from BCTGW to members of Congress called on them to reject the “very regressive” tax hike, which “will result in job losses and hardship among our members and their families.”
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Swedish Match spokesperson Sandy Fowler-Jones said the proposed tax increases are not only regressive, but would result in lower consumption that “will have a significant impact on jobs at our Owensboro, Texas plant. Kentucky “.
“Less demand means less need for employees to work on these production lines. Jobs are at risk if this tax increase is approved.”
“the letter speaks for itself.”
A spokesperson for Yarmuth – who was instrumental in shaping the bill and finding a compromise between Democrats – said the congressman had not heard from Beshear’s office On the question.