It is a bad idea to use tobacco taxes to fund medical care for children in poor families. That’s because it makes the funding dependent upon Americans who unwisely choose to smoke. But Congress did that early this year, and it’s running into big unintended consequences.
The tax on roll-your-own cigarettes rose from $1.10 per pound to $24.78 per pound. But as it turns out, pipe tobacco is very close to the tobacco used to roll cigarettes. Because pipe tobacco was exempted from the tax hike, tobacco companies are labeling basically the same roll-your-own product as pipe tobacco to avoid the tax increase. Some small companies had to do that or face bankruptcy because of the tax increase.
The loophole is costing the government “hundreds of millions of dollars,” The Associated Press noted.
While tax “evasion” is illegal, it is no surprise that companies, like individuals, engage in tax “avoidance.”
source: http://www.timesfreepress.com
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