Tax Panel Lights On Smokers 20 Cents More Per Pack Would Raise $18 Billion In 5 Years
Senate tax writers voted Thursday to increase cigarette taxes by an additional 20 cents a pack as a way to scale back proposed higher taxes on airline tickets and extend health coverage for uninsured children.
On an 18-2 vote, the Senate Finance Committee approved a tax bill that - until the new cigarette tax was approved - would have produced a total net decrease in taxes of $85 billion over the next five years.
Sen. William Roth, R-Del., the committee’s chairman, said the cigarette tax - which would be in addition to the current 24-cent federal levy on each pack - would finance several changes to a tax package he released earlier this week.
The new cigarette tax increase would raise an estimated $18 billion to $19 billion over the next five years, according to Senate aides. Of that amount, $8 billion would be designated to provide health care for now-uninsured children.
On Wednesday, the committee approved $16 billion for child health care over the next five years. The combined $24 billion would enable the government to provide coverage for about two-thirds of the estimated 10 million children in the country now lacking health care.
Sen. Edward M. Kennedy, who last month lost a Senate vote to raise cigarette taxes by 43 cents a month after President Clinton came out against it, said the committee’s action shortchanges children’s health.
“It is unconscionable to use the vast majority of the increased revenues from the tobacco tax to support airlines instead of children,” said Kennedy, D-Mass. “I intend to do all I can to remedy this flagrant injustice when the bill comes before the full Senate next week.”
Revenues from the cigarette tax hike also would be used to decrease by $3.5 billion the $36 billion increase in airline taxes in Roth’s original package, offset $6 billion in earned income tax credits for the working poor and provide $1.7 billion in corporate tax relief, aides said.
Clinton helped defeat a Senate vote in May on increasing cigarette taxes to pay for child’s health care, saying it would upset his budget-balancing agreement with Republican leaders in Congress. But that proposal was for a 43-cent increase atop the current 24 cents a pack.