The U.S. House of Representatives has passed legislation to expand the State Children’s Health Insurance Program (SCHIP) and to fund the program by raising federal tobacco taxes, the Phoenix Business Journal reported Jan. 14.
Revenue gained from a 61-cent federal tax increase per pack of cigarettes will be used to fund the $33-billion plan to expand SCHIP coverage to more U.S. children and families. Cigars, rolling paper and other tobacco products will also see a tax hike.
The program expansion and the tax increase were supported by House Democrats, but the funding mechanism faced criticism from some economic conservatives.
“Tobacco tax increases over the years have resulted in less smoking and therefore a decline in tobacco tax revenue,” said Steve Voeller, president of the Arizona Free Enterprise Club. “Tying the expansion of a government program to a declining revenue source is the sort of backward thinking that makes taxpayers scratch their heads.”
President-elect Obama is expected to sign the bill into law once it gains Senate approval.