NewsWhore
09-21-2007, 03:30 PM
US party politics and children's health are indirectly affecting the Dominican tobacco industry and the DR must stand by and wait for a decision to be made. US President George W. Bush has announced that he will veto the bill, if approved by Congress, which seeks to increase the tax on cigarettes from US$.39 to US$1.00, and would also increase the tax on cigars, from five cents to US$3.00. The money received from the taxing of tobacco would then be used to fund the State Children's Insurance Program (SCHIP), which is due to expire at the end of September. The bill would entitle 3.2 million low-income families to receive health care for children and would bring the number of state insured children to 10 million.
President Bush has continually rejected the hike because, according to him, it would increase the government's role in health care, financed by a huge tax increase. The President has asked lawmakers to send him a temporary extension of the program in order to give politicians time to work out their differences on the issue and added that it was foolish to pass a bill they knew he would veto, in order to claim a political victory.
The Senate's version of the bill, nevertheless, passed with enough support to be veto-proof, setting the stage for a delicate compromise between chambers when Congress returns next month.
As reported in Cigar Aficionado, the US House of Representatives has agreed to accept the Senate's version of SCHIP bill, hoping to get new legislation passed before the current provisions expire on 30 September. The House of Representatives version had put the cap at US$1, which would still mean a 2,000% tax increase on some cigars.
The hefty increase threatens to decimate cigar exports from the Dominican Republic, Nicaragua and Honduras, three leading cigar exporters to the US, responsible for around US$600 million in annual sales. The three countries have only recently begun to implement a free trade agreement with the US, DR-CAFTA, where they open up their borders to billions in duty free US imports.
Meanwhile, US distributors have already notified local producers to stay the inventories. The bill affects all tobacco products, but the increase is much higher for cigars.
President Leonel Fernandez, interviewed in NY, said that children in the DR would be negatively affected by the tax. Tobacco Institute (INTABACO) director Adalberto Rosa forecast that the tax on tobacco products and their derivatives could cause a 30% decrease in cigar exports. This represents a loss of US$100 million a year in financial losses and would affect families whose livelihoods depend on the production of tobacco. He says that 108,000 people would be affected. INTABACO is part of the regional assembly of the World Association of Tobacco Producers (ITGA), which is lobbying the US government to rethink the tax on tobacco products.
More... (http://www.dr1.com/index.html#7)
President Bush has continually rejected the hike because, according to him, it would increase the government's role in health care, financed by a huge tax increase. The President has asked lawmakers to send him a temporary extension of the program in order to give politicians time to work out their differences on the issue and added that it was foolish to pass a bill they knew he would veto, in order to claim a political victory.
The Senate's version of the bill, nevertheless, passed with enough support to be veto-proof, setting the stage for a delicate compromise between chambers when Congress returns next month.
As reported in Cigar Aficionado, the US House of Representatives has agreed to accept the Senate's version of SCHIP bill, hoping to get new legislation passed before the current provisions expire on 30 September. The House of Representatives version had put the cap at US$1, which would still mean a 2,000% tax increase on some cigars.
The hefty increase threatens to decimate cigar exports from the Dominican Republic, Nicaragua and Honduras, three leading cigar exporters to the US, responsible for around US$600 million in annual sales. The three countries have only recently begun to implement a free trade agreement with the US, DR-CAFTA, where they open up their borders to billions in duty free US imports.
Meanwhile, US distributors have already notified local producers to stay the inventories. The bill affects all tobacco products, but the increase is much higher for cigars.
President Leonel Fernandez, interviewed in NY, said that children in the DR would be negatively affected by the tax. Tobacco Institute (INTABACO) director Adalberto Rosa forecast that the tax on tobacco products and their derivatives could cause a 30% decrease in cigar exports. This represents a loss of US$100 million a year in financial losses and would affect families whose livelihoods depend on the production of tobacco. He says that 108,000 people would be affected. INTABACO is part of the regional assembly of the World Association of Tobacco Producers (ITGA), which is lobbying the US government to rethink the tax on tobacco products.
More... (http://www.dr1.com/index.html#7)