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July 18, 2007

The Federal Government Gets into Tobacco

Usually government is sneaky with pick pocketing you clean. They'll normally just reach in and pluck your wallet, and leave it at that. But with new tobacco legislation coming up, they may be going for the full monty. Yesterday, news outlets were reporting on a bill that could possibly raise taxes on cigars by over 20,000 percent. The bill would allow the federal government to raise taxes by 5 cents to $10--PER CIGAR!

As part of an increase in tobacco taxes designed to pay for children's health insurance, the nickel-per-cigar tax that has ruled the industry could rise to as much as $10 per cigar.

Call this the government stealing your wallet.

However, today it is being reported that legislation also aims to give the government full control over regulating the quality of cigarettes:

The Senate committee that oversees public health is expected to approve a proposal Wednesday that would give the government authority over tobacco products for the first time. If the bill becomes law, the Food and Drug Administration would receive new power to crack down on advertising aimed at children, add stronger warning labels to tobacco products and reduce dangerous ingredients used in cigarettes. Although similar proposals failed to pass as recently as 2005, analysts say the bill's chances have dramatically improved now that Democrats control both the House and Senate.

Call this the government now stealing from your shirt pocket.

This new regulation is bad in two different ways. First, this step adds a whole new level to the meaning "nanny state." The health risks of cigarettes have been common knowledge beat into our heads since primary school. But guess what? People still smoke anyways. That's why groups like "Whadafxup" are so useless. People know smoking is bad; they just don't care.

Secondly, this is bad for the consumer because it creates a de facto monopoly for Phillip Morris, who, coincidently, supports this legislation.

"Under this proposal they can basically lock in their market share and make it much more difficult for their competitors to promote their products to adults," said Steve Kottak, a spokesman for Reynolds American, which makes Camel brand cigarettes. The Winston-Salem, N.C.-based company is the second largest tobacco company in the U.S.

Phillip Morris' competitors have referred to this bill as the "Marlboro monopoly act," after Phillip Morris' top selling brand of cigarettes. Democrats are never short on talent for creating politics' biggest ironies. For as much as they hate "monopolies" like Microsoft and Walmart, they sure don't take issue with creating artificial monopolies that would otherwise not exist. In the words of Ayn Rand:

"Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action."

Apparently, Congress has forgotten that cigarette companies don't make health products, and they really don't care about obvious health hazards. After all, why should they? When the market starts to reflect a growing trend that smokers want a healthier cigarette and begin buying less, cigarette companies will react. Regulating the safety of cigarettes takes choice out of the hands of consumers and creates an artificial market environment that benefits only the companies prepared financially to adapt to the new changes, which is in this case, Phillip Morris.

If FDA gains oversight of tobacco, companies would have to submit any new products that claim to have safety benefits to the government for scientific evaluation. After investing more than $300 million in a new research facility to develop safer tobacco products, analysts say Philip Morris is more prepared than competitors to conduct large-scale studies that would be needed to gain FDA approval of such products.

So, it would appear that between a potential $10 tax on cigars, and legislation that turns over cigarette quality control to the Feds, the government has decided to enter into the tobacco business.

While 'Smoking Fascists' may cheer because consumers are no longer allowed to chose for themselves what they put in their lungs, and Phillip Morris cheers their government-assisted takeover of the cigarette market, the little guys get the shaft. Nobody knows this tragic reality more than people like Eric Newman, whose family has rolled premium cigars in Florida for several decades.

"Why don't we just go out of business?" Newman said. "Here, you can run our company, Mr. Government."

Ahhh, nothing like the refreshing smell of communism.

"Things happen strangely in Washington," Newman said.

Mr. Newman, you have no idea.

Posted by Andrew Davis at July 18, 2007 12:25 PM

Reader Comments:

I will be curious to hear what smokers think of this, as I have somewhat mixed views of it. I am not a smoker. Never have been, never will be. And I honestly don't understand why anyone would choose to smoke in this day and age knowing what we do about the health effects. It broke my heart when my own daughter started smoking a few years ago and now can't quit.

My problems with smoking personally come from the second hand aspect of it. I don't care if you want to smoke. Like I said before, my daughter and her husband both smoke, and although it breaks my heart I don't prevent them or try to control them or anything like that. It is their choice to do that. But I do make them go outside to do it, and even that bugs me because now my whole front porch smells of cigarettes. It gets into the very woodwork of my house and is not easily cleared. There are times when I have to deal with it walking through smoking areas at work when there is no other way to get to where I am going. If I choose to go to a concert of show often times I have to deal with the smoke in the air. These are times when someone else excercising their rights infringes on me, and I don't know what the solution is.

We could do like they did in California and are beginning to do in other states across the country, effectively banning smoking damn near anywhere. But this infringes on the rights of the smokers which isn't fair.

We could require businesses to have designated smoking areas, much like most airports have smoking lounges that allow the non-smokers reprieve from exposure, but this subjects government control upon the businesses and many of them probably can not afford to do things like smoker's lounges and the government should not have that right to impose that on them anyways.

But if the government decided to just not ever regulate anything then what? How many more people would get addicted to it and how much more would someone like me have to be exposed to it whether we choose to or not? I have to say that this is a difficult area for me to accept the party stance on illegal drugs too. It is scary enough to me worrying about getting run over by a drunk driver in front of my own house. What if someone is on crack or heroin and runs over my grandson? My fears with this arguement is that the numbers of people addicted to drugs would skyrocket, and those of us just trying to live our lives would have to barricade ourselves in our houses to avoid the anarchy. That might be a little extreme but it does worry me. When we have to look at putting my 6 year old granddaughter into a private school because drugs are such a huge problem in her ELEMENTARY SCHOOL that scares me. She is 6, and already I have to worry that someone at her school is going to give her a lollypop laced with meth.

What am I getting at here? Hell, I don't know. I guess the bottom line to me is that if the government is going to keep micro-managing everything tobacco then they need to pay for it with taxes or monies that they somehow get from tobacco. It already irritates me that I am taxed to the teeth to pay for stupid things like pointless slumber parties for the senate. I really don't want my dollars to go to taking care of people who are suffering and dying due to their own concious decisions. They made the choice to smoke, they should deal with the consequences. It should not be my problem. I just want the freedom to enjoy my life without having to worry about others, government or otherwise, infringing on my rights. I don't want to have to worry about what the guy next to me on the interstate was snorting this morning before leaving his house. I want to be able to let my grandkids play in the front yard without having to worry that someone will snatch them up or attack them the second I turn my back. I don't want anarchy.


Damn, I babbled a lot on this one. Sorry...

Posted by: Matt at July 18, 2007 03:24 PM

Matt, city governments and county governments can decide how they want to deal with smokers and voters in those areas can decide what powers they delegate to their local governments. Those that don't like it can simply move to a nearby city whose rules allow them their rights. And that stance is Constitutional, unlike the bill being discussed here.

The difference is that I don't have to go up against a whole State or Nation to have my rights respected. And that Constitutional stance comes in mighty handy for things like farm and jungle animals, unneccesarily dangerous weapons, and yes, drugs.

Frankly, if I don't want smoke on my clothes and in my lungs, I won't go to a bar, restaurant, concert, or any other privately owned area that allows smoking (it's their property and I have no right to dictate how they use it by means of force). If I don't want my daughter and her husband smoking on my property, I'll tell them not to (it's my property dammit).

But the Federal and State governments should have no say regarding those issues and as far as smoking is concerned...I wouldn't choose to live in a city that saw it as their duty to regulate and restrict those sorts of activities.

Posted by: will mack at July 18, 2007 06:28 PM

Matt, the people who want to do drugs already do them. The only difference is that at present our country spends billions in cash and lose agents lives to stop them and it doesn't work at all. They're lucky to stop 10% of all drug sales which is pretty much useless in the grand scheme of things. The only things that stop people from doing drugs are education and death. If the former doesn't work, the latter probably will.

Posted by: Nick at July 18, 2007 10:06 PM

10$ ?!?!?!?!?! i don't pay that much for a cigar period!!!! If they start attacking pipe tobacco i am going underground. i don't have anything politically enlightened to say about this. i am just ticked.

Posted by: neilwetmore at July 19, 2007 11:12 AM

They should not tax any of it. Designate smoking areas and then people can choose to go that area or not. Its my health. I don't smoke cigarettes but do smoke cigars and pipes.

I would not intentionally blow smoke on someone who didn't want it. I don't smoke in my house by choice. I hate stale cigar smoke. But tobacco is not addictive and non-toxic. Don't believe the studies. If you drink too much water you can die. Is water poisonous? No. Is drinking 2 gallons in one hour going to kill you? Yes.

Look at your food sometimes. Do you think those chemicals and preservatives are any better for you?

When Pfizer wanted to sell more Lipitor they simply funded a study that showed folks should have only 200 on their cholesterol score and not 300. Then the standard was lowered and BAM! Suddenly a new customer base. They would not sell enough of the drug if only people who had 300+ took it.

Cigars, pipes, and pure tobacco cigarettes are perfectly safe. Its the addictive chemicals that the manufacturers put into the cigarettes that cause the health problems. Because then you smoke more than you should. If anyone chained smoked 4 packs a day of even the most pure tobacco they'd die. So the addiction fuels the result. Pure tobacco cigarettes are safe and non addictive. Many smokers have told me these types are not as powerful as the main brands. They mean to say they have no chemicals to feed the addiction.

Anyway...there is nothing wrong with tobacco. Its all a well orchestrated tax revenue plan.

Posted by: ed.s. at July 19, 2007 11:55 AM

Right now, in Dallas TX, a bar owner is prohibited from allowing his patrons to smoke on his property AT ALL. Needless to say bar owners in Richardson and Plano just north of town, who have had customers driven to them by this legislation, love the idea.

I'm all good with a business owner deciding his business doesn't cater to, or even tolerate, smokers. I don't smoke in *my own* home, nor allow my friends to, and I've been smoking for 35 years. I know too many musicians, too many singers, and I don't want my house to smell like an ashtray.

I am NOT okay with the government going to a business owner and telling them, "You are required to cater to the tastes of *this* market and prohibited from catering to the tastes of *that* one, which so far as I can tell is all anti-smoking laws do.

As for the tax, the effects of 2nd hand smoke, etc... ya wanna tax a specific group for something? NO problem. Prove to me that they're paying to correct something *they* did. Not vague, "this might be true", "we're afraid this is true", political BS games as has been done with global warming.... PROVE it. If you can't, and you tax them anyway without proving that specific group to be liable.... then it's just armed robbery, nothing more or less.

Don't know how the law runs in *your* home town or state, but in Texas if you catch an armed thief in your home, it is your right to shoot him dead. Perhaps this explains why politicians don't knock on doors anymore.

Posted by: Sam at July 19, 2007 12:05 PM

Government market control is causing the wacky health care industry woes. Why don't we learn from this? I wish people would let go of their "the government oughta do something" attitude.

What if I want to smoke something with carcenogens mixed in?

Posted by: Coach Jim at July 19, 2007 03:08 PM

I'm quickly becoming a Libertarian but this blog is well .. ignorant!
While additives do make cigarettes worse , much worse, "pure tobacco" is far from safe. In fact inhaling ANY 600 degree smoke is probably not a good idea.
And yes people still smoke because they experiment as kids and it hooks them. An 11% increase in added nicotine levels since 1998 alone! I guess our "government protectors" forgot to deal with that in the self serving Master Settlement Agreement? Cigarettes are literally desidned to hook kids!
Having said all that FDA regulation is a bad idea for many reasons including the fact that the FDA would be signing off on the sale of posion. We already have the states making huge profits off smokers.
Consider this though, it will be virtually impossible for the LP to really take hold unless vast reductions in government funded insurance ( medicaid and Medicare )can be accomplished. That can never happen unless we effectively deal with the tobacco problem as a nation, because of the out of control health care cost.
Joel

Posted by: Joel Schuyler at July 20, 2007 08:47 AM

Health insurance should be sold just like auto and home insurance, ie based on risk levels. If you are a smoker, you should pay a higher premium than me because I don't smoke. If you are overweight you should pay a higher premium than a thin person who doesn't smoke. Ever buy life insurance? Premium is based on risk. Health insurance should be allowed to be rated on risk, but government regulations prohibit this. That is a large part of the health insurance problem. Not all of it, obviously, but a large part. Risk rated insurance might cause some people to realize they'd better stop smoking and start dieting if they want affordable health care, or they better get a job that can help them afford it. Either way, I shouldn't have to pay 700 a month when I'm rarely sick, in good health, and take care of myself. That 700 is the same as my fat, two pack a day, diabetic, high blood pressure co-worker. Government involvement ruins health insurance, what a shock.

Posted by: Nick at July 20, 2007 12:36 PM

Then, Joel, you should be able to keep your libertarian principles and we can all manage our own health, healthcare costs, and intake freedom as long as we're prepared to account for our actions and take responsibility for ourselves and not everyone else.

Posted by: Nick at July 20, 2007 12:38 PM

For some of the ignorance people on here, I agree that a person chooses to smoke should pay a higher cost. But a person who is diabetic no fault of their own is a different matter. There are health issues that are of people no fault. I will say this. WE ARE PAYING MOST OF THE HEALTH CARE TO THE ILLEGAAAALLLLLLSSSSS AND THEIR BABIEEEEESSS. While the rest of us PEON CATTLES get crap.

Posted by: Reality at July 21, 2007 06:23 PM

PS. UNLESS YOU SPEAKA SPANISH OR BE BI-LINGUAL THEY HIRE MEXICAN.

I have a friend who was REFUSE HEALTH CARE by a MEXICAN ILLEGAL who says I quote "Your white" you don't get nothing.

Posted by: Reality at July 21, 2007 06:25 PM

Reality, you may not speak Spanish, but you barely speak English well, so...

Health Care costs that we pay to insurance carriers do not go to pay for illegal aliens medical care, the government taxation does. Insurance carriers only pay the bills of their own customers. So, yes, we're paying but that is because of the government, not insurance carriers or medical providers. We would be much better off of those illegals' medical bills were paid for by charity or the illegals themselves. If they come here to get paid, they can also come here to pay. It goes both ways.

As for the diabetic not having to pay more because it wasn't their fault, that is only true part of the time. A person's diet can significantly increase their chance of having diabetes. I'm not saying a person should get an increased premium necessarily just because they contracted an illness, but if the condition was pre-existing, or their own choices lead to their condition on a significant level then yes, they should pay more than someone who does the best they can to stay healthy.

In addition, the government should not prevent insurance carriers from offering emergency plans to those that want them, or plans tailored to a customers choices without all the bells and whistles (like gym memberships and massage therapy). That is not the case at present in most states. Usually, if it is an offering it must be included for all policies, with very few exceptions, and those exceptions are usually based on your group size, not your choices.

Posted by: Nick at July 22, 2007 09:54 PM

You do not have a clue about me to make that kind of judgement, hiding behind the computer it is very easy to make a judgement about someone you know nothing about. For all I know you could be a MEXICANO with an english interpeter.
Or someone from Nigeria.

Posted by: Reality at July 23, 2007 12:24 AM

Since I do work in a hospital, I really question if the person is really at fault for being diabetic. There are women who become diabetic being pregnant. There are juvenile diabetes. Taking the medicine for diabetic has a fatty content that make it harder to lose weight. Along with all that, you could lose a leg, your eyesight and diabetic has an affect on your brain. It not as simple as you think. People who are skinny are also diabetic, don't think it all aimed at people who are overweight.

Posted by: Reality at July 23, 2007 12:31 AM

What this country need is a good ten cent cigar.

But sometimes, a cigar is just a cigar.

Posted by: tim crowley at July 23, 2007 08:12 AM

Reality, my judgement of you is based on your written word here on this blog. If you don't like the criticism, do better. And, I am not an illegal with an interpreter, but even if I were, that would not change the fact that you have poor written English. If we were face to face I wouldn't be reading your words, but I still wouldn't be afraid to criticize you if you made an ignorant statement.

I said PART of the problem with diabetes is diet related. The comment was also a small part of a larger issue in that many people do not take care of themselves and should not pay equal premium to those that do. Those that contract an illness through no fault of their own was never part of my argument because I agree with you that should not be a factor, unless it is a pre-existing condition in which the new insurance carrier should have the legal right to price based on medical records, or the insurance seeker may go elsewhere. And, I never said I was one that took care of himself either, but I can see the logic of lifestyle based insurance rating. I'm not high and mighty and I'm not living in a glass house. I'm stating my opinion based on my experience in health insurance as well as property and casualty insurance, both heavily regulated by government and restricted from accurate pricing, health insurance much more so.

Making a blanket statement that health care costs are the fault of illegal aliens is to paint a false picture. It is one very small part of the overall problem of health care costs, but again that is a welfare state and medical billing issue, not a health care pricing issue.

Posted by: Nick at July 23, 2007 02:28 PM

Whether it's a diabetic or a crack baby the facts are the same. You say they have no control and therefore shouldn't have the responsibility of providing for their own care.

At what point did I, an unrelated citizen, suddenly develop the responsibility for a patient's care?

How is it equitable or fair to steal from every taxpayer (and thereby cause harm) for the care of one person who has an unfortunate run of luck.

If the person who is afflicted does not have responsibility for their own person surely I do not. Who does than? Government? Government is just another word for myself and my neighbors.

If government has the "responsibility" to provide care than it would also have the natural responsibility to provide for correction of any other inequality beyond the person's control.

In short, my neighbors and I by definition would be the keepers of a diabetic, who we've never met simply because this person was born with a genetic defect? That violates the basic principles (Life, Liberty, Property) of both parties by definition.

It is the role of private charity (at the charity's discretion) to provide for persons who cannot or choose not to provide for themselves.

Regarding insurance:

The reason premiums are so high is because government has removed the "insurance" function from the product and replaced it with a group paid plan through legislative intervention. It's no longer insurance when it covers planned medical procedures such as pregnancy.

True insurance is still very much affordable. People have just been taught not to use it. I just found a quote at $135/month for a family of four. The flip side is $900/month with all the features some states would impose through legislation.

Insurance would be considerably less than I was able to find if even the most basic plans weren't saddled with excessive coverage requirements due to rogue legislation.

In short, if you can't afford your insurance thank your legislature and that of the rest of the country who drive costs up regularly with legislation that oversteps the role of government.

The insurance companies will not complain about this arrangement because they have a legislative profit guarantee built in. It's really a good model of government inefficiency in private enterprise.

Posted by: Fairness at July 23, 2007 10:31 PM

"Pure tobacco" does not hook anyone. Nor was it designed to hook children. Pure tobacco is grown like any other plant. You harvest it and consume it. Its no more addictive than corn. Don't believe biased "studies" that most of us are not qualified to understand. They tell you its bad and you believe it like lemmings. If it wasn't bad then how could they tax it? They only tax the big bad nasty things they deem are so. Without a "Study" to prove it, it would be unacceptable. But that is only for pure tobacco like you find in a cigar.

Cigarette companies put extra addictive chemicals in them to further the use of their product. Take a menthol cigarette for example. Does menthol come naturally in a tobacco leaf?

I did not start smoking cigars until I was older than 21. I never smoked a day in my life either. I did so because I wanted to. I chose to. That's my right. If health care was affordable, you would not need insurance. I would pay more for health care based upon my decisions, but I feel that if health care were affordable through privatization efforts, it would be a moot point. There would be health care providers that would cater to the smoking crowd if the customer base were large enough.

Posted by: ed.s at July 24, 2007 12:22 PM

I guess it won't matter soon anyways. One of the socialist will end up being president and we will have uniforciable healthcare.

We are just a bunch of cattle to sit down, shut up and pay our taxes.

Posted by: reality at July 25, 2007 12:48 AM
 


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