SCHIP Passes in House, Senate votes next
The House of Representatives last night passed the SCHIP legislation by a vote of 225-202 (see attached roll call vote). As we informed you yesterday, that bill (H.R. 3162) includes a change in the proposed large cigar tax rate -- from 44.63% to 33% for five years and nine months, then increasing to 40% on October 1, 2013. The cap remains the same -- $1 per cigar. There were no changes made in the tax rates on cigarettes and other tobacco products. The floor stocks provision continues to apply to cigarettes only. Note that the closeness of the vote indicates that the House will not be able to override a Presidential veto.
Debate continues in the Senate where Senators Bill Nelson (Dem., FL) and Lamar Alexander (Rep., TN) have introduced an amendment which would lower the proposed $10 per cigar tax cap to $3. We understand they have been working with the Senate Finance Committee staff on this issue and, as a result, we expect the amendment to be approved. The full Senate is expected to approve the SCHIP legislation this week. The floor stocks provision continues to apply to all tobacco products although, considering that the federal excise tax on large cigars is a percentage of the manufacturer's sales price and is incorporated in that price, it is hard to see how a distributor or retailer would know how much the manufacturer paid in federal excise taxes. Even if the final Senate vote indicates that the Senate can override a Presidential veto, the veto will still be upheld in the House.
Click the link to read The House vote in Acrobat Reader.