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555 Dirksen Office Building
Washington, DC 20510
Ph: 202.224.6342
Fax: 202.224.1100
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Raleigh Office:
310 New Bern Avenue
Suite 122
Raleigh, NC 27601
Ph: 919.856.4630
Toll Free: 866.420.6083
Fax: 919.856.4053
Salisbury Office:
225 North Main Street
Suite 304
Salisbury, NC 28144
Ph: 704.633.5011
Toll Free: 866.420.6084
Fax: 704.633.2937
Western Office:
401 North Main Street
Suite 200
Hendersonville, NC 28792
Ph: 828.698.3747
Fax: 828.698.1267
Eastern Office:
306 South Evans Street
Greenville, NC 27835
Ph: 252.329.1093
Fax: 252.329.1097
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Floor Statements
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STATEMENT URGING REJECTION OF A TOBACCO TAX HIKE THAT WOULD HARM NORTH CAROLINA’S ECONOMY
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July 30th, 2007 - Mr. President, I am perplexed by what’s happening in the Senate these days…many of my colleagues are calling for a huge tax hike on tobacco, a product purchased disproportionately more by lower-income people, in order to provide billions of dollars to expand SCHIP health care coverage for children whose families cannot afford insurance coverage. Now while I strongly support reauthorizing SCHIP, Mr. President, a massive – and highly regressive – tax increase on an already unstable product is a terribly irresponsible way to fund this important program. Furthermore, my home state of North Carolina, which has lost more manufacturing jobs than any other state and continues to undergo a difficult economic transition, stands to lose tremendously if the tobacco tax skyrockets.
I am fully aware that many of my colleagues view ganging up on tobacco and smokers as politically popular. I am not appealing to you to change your views on smoking – but I am urging you to acknowledge the reality that this tax increase is an irresponsible and fiscally unsound policy. According to the Tax Foundation, “no other federal tax hurts the poor more than the cigarette tax.” Of the 20 percent of the adult population that smokes, around half are in families earning less than 200 percent of the federal poverty level. In other words, many of the families SCHIP is meant to help will be disproportionately hit by the Senate’s proposed tax hike.
In addition, tobacco sales have been declining two to three percent a year, and are expected to be slashed by another six percent if the federal excise tax is increased. Yet in order for this tax hike trick to work, millions more Americans would have to actually take up smoking to foot the bill! A recent ad in Roll Call from North Carolina-based R.J. Reynolds put it best…below that familiar picture of Uncle Sam pointing his finger was the line “Congress Needs You To Smoke.” That’s right…more than 22 million additional Americans will need to take up smoking to keep the SCHIP program running over the next decade.
Another example of how ill-conceived this proposal is…the Senate very well may approve legislation this year to force the FDA to regulate tobacco products. That agency’s staff and resources are already fully consumed by its mission of regulating food, medical devices and pharmaceuticals…but if many in the Senate have their way, the FDA will soon take on tobacco. It’s no secret that the Senate FDA bill seeks to ultimately put many tobacco companies out of business. So, it appears that we’re going to eliminate tobacco companies while simultaneously relying on the tax revenue from tobacco sales to fund children’s health care? Mr. President, if we are really serious about providing health care coverage to children in lower-income families, this illogical plan clearly is not going to cut it.
I oppose this tax hike plan not only because it is fiscally unsound, but also because it unfairly hurts my home state of North Carolina. In recent years, the forces of the global marketplace have triggered a difficult economic transformation, and our traditional industries of furniture and textiles have shuttered the doors of their factories and mills – resulting in the loss of 194,000 manufacturing jobs. Tobacco, another longtime linchpin of North Carolina’s prosperity, has also faced its share of challenges from offshore competition; however, this economic engine for North Carolina has endured. But it very well may collapse altogether if the Senate moves forward with this 61-cent tax increase on tobacco products.
Tobacco is woven into the fabric of my state. Just like Texas and cattle and Iowa and corn – in North Carolina, tobacco is part of our history and culture. In fact, many of our state’s great educational institutions and health care facilities are rooted in tobacco funding.
Today, more than 255,000 North Carolinians rely on tobacco for their livelihood. These are not just folks in the fields and factories, but also suppliers and retailers. The industry accounts for $22 billion in value-added revenue – or six percent of North Carolina’s economic activity. Clearly, if the Senate indiscriminately picks this industry to foot the bill for additional government spending, North Carolina suffers tremendously. According to Blake Brown, a widely respected agricultural economist at N.C. State University…
• North Carolina would lose nearly $16 million in farm production and at least $540 million in decreased manufacturing;
• We’d lose up to $12.5 million in the state’s cigarette tax revenue; and
• We’d lose $10.3 million from our portion of the Master Settlement Agreement payment – which funds a bulk of our state’s economic development programs.
In addition to North Carolina losing thousands of manufacturing jobs, supplier and retail jobs, state Agriculture Commissioner Steve Troxler says we could lose as many 1,800 farm jobs. Compound these job and revenue losses with the looming threat of FDA regulation…and North Carolina’s looking at what Commissioner Troxler calls a “double whammy.” The rug is being pulled out from under us. Am I supposed to go back to my constituents whose jobs are at stake and say, “Sorry folks, Congress doesn’t think you’re taxed enough...so yep, Congress raised taxes to the tune of $35 billion, at the expense of your jobs and farms”? Mr. President, no single industry should be targeted and victimized by such unreasonable federal regulations and taxes.
Let me be clear: reauthorizing SCHIP has my strongest support. Since its creation in 1997, this program has lowered the number of uninsured children by almost 25 percent. As we seek to provide greater access to health care for all Americans, starting with children first is not just good policy, but the right thing to do; however, this legislation is the wrong way to go. Period.
I urge you to vote for the McConnell alternative. It responsibly restores SCHIP to its original intent – helping low income children. I’m not asking my colleagues to sympathize with the tobacco industry and smokers. I’m asking you to look at the Baucus bill for what it is…a massive tax hike that disproportionately impacts low income people…and an ill-conceived and unsound plan that unfairly targets a single industry and hurts the economy of several states. Let’s reauthorize SCHIP...but let’s do it the right way.
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| Elizabeth Dole |
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